Gold remains near two-month highs ahead of US inflation data

The dollar index remains steady on Monday as investors continue to monitor how monetary policy and the pace of economic recovery are affected by price pressures. Treasury yields rose overnight, and gold gained to two-month highs at 1820 as traders digest solid job data, with the 10-year bonds recovering from 6-week lows at 1.44%.

A bullish shift in gold’s outlook

Gold price remains on track for additional upside, trading within an ascending channel above 34 WMA. After Friday’s impressive rally, buyers have seized control following central banks that were patient with rate hikes.

Bullish traders are more confident in extending the rally after the sustained breakout of $1,800 and embracing last week’s top at $1,1814. As long as positive momentum prevails, a potential test of a strong barrier around the $1,833 supply zone remains distinct.

On the downside, sellers will watch 1792.39 support to take the driver seat.

Focus on US inflation and China producer price data

This week, US consumer prices will be closely watched after last week’s payroll gains and increases in average earnings. In light of supply-chain bottlenecks and higher energy prices, Wednesday’s reading is expected to show price pressures running at their fastest pace in 30 years.

The Chinese producer and consumer price data are also expected to be released on Wednesday, with annual producer price growth likely to surge to 12%, a sign of further price pressure to come.

Exports in China slipped in October but beat expectations due to booming global demand and easing power shortages after the Coronavirus pandemic disrupted the supply chain severely.

However, despite the year-on-year increase of 20.6% in imports, overall weak domestic demand hampered its growth to hit 25% anticipated by investors, whereas 17.6% growth was recorded during the previous month.

Chinese trade balance topped $84.54 billion last month, the highest on record. It was also above the expectations of $65.55 billion and September’s surplus of $66.76 billion.

As a result of overall business activities, China’s economy grew 4.9% in the third quarter, its weakest quarter since last year.