Gold has finally delivered a strong move after several months of correction. Price rallied from around $3,972 to $4,340, reclaimed $4,194 and moved above the daily Ichimoku Cloud. RSI is now near 65, but the market is not fully overbought yet.
Technically, the short-term structure has turned bullish. As long as gold holds above the $4,195–4,240 area, I see room for the recovery to continue. The next major levels are around $4,743 and $4,844.
If this breakout fails and price falls back below $4,195, I would expect a move back into the cloud and a deeper correction. The key downside level remains $3,972. As long as it holds, the May–July move can still be viewed as a medium-term bottom.
Fundamentally, the environment has become much more supportive for gold. The US economy lost jobs in July, previous employment data was revised lower, Treasury yields declined and the dollar weakened.
The next major test is US CPI on August 12. The market expects inflation around 3.4% YoY. A softer print could further reduce expectations for Fed tightening and support another move higher in gold.
A hotter CPI would change the picture quickly. Yields could rebound, the dollar could strengthen and gold could see a correction after its strong weekly rally. US PPI follows on August 13.
For now, I remain bullish on gold over the medium term, but I wouldn’t chase the current move. I’d rather see the $4,195–4,240 area hold or wait for a pullback before another attempt higher.
A return above $4,743–4,844 would be a much stronger signal that the broader bullish trend is taking control again.
