Gold Hit By Profit-Taking Ahead of Key Inflation Data - Should You Buy the Dip?

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Gold Hit By Profit-Taking Ahead of Key Inflation Data - Should You Buy the Dip?
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Commodities Analysis by Fawad Razaqzada covering: XAU/USD, Gold Futures. Read Fawad Razaqzada's latest article on Investing.com

Gold dipped Monday morning due to profit-taking but longer-term outlook remains bullish, possibly marking a third month of gains.Gold

So, gold’s recent gains partly reflect a weaker dollar and increased odds of a rate cut by the Fed. This week, the US dollar will be put to a big test as we have a couple of significant data releases coming up., and by extension gold, could be impacted significantly by the release of this week’s key US data. We will haveFor gold, the focus is on signs of weakening economy and labour market versus continued inflationary pressures.

Gold has been driven this year by strong demand amid ongoing central bank purchases and increased inflation hedging. Years of above-forecast inflation has reduced the purchasing powers of global currencies, and in some cases drastically so, increasing the need for alternatives to fiat currencies. Gold has stood out as a clear alternative.

Subsequent bullish targets above $2460 include $2400, followed by the record high that was hit earlier in April at $2431. But the potential rally could easily extend far beyond that level once the ball gets rolling. However, I will only consider short gold setups if and when I see a clear bearish reversal pattern. For now, dip-buying remains the name of the game.Be sure to check out InvestingPro to stay in sync with the market trend and what it means for your trading. As with any investment, it's crucial to research extensively before making any decisions.

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