The U.S. producer price index for March came in at up 1.4% from February and compares to the forecast for up 1.1%. Year on year, PPI was up 11.2%, which is a record reading for the report.
Moreover, on Tuesday the U.S. consumer price index for March was the highest reading in over 40 years, at up just over 8% year-on-year. Although it was not as high as some economists and the market had feared.
With PPI reaching double-digits gold rallied due to its place as an inflation hedge. From a technical perspective if gold can break and hold above the $2,000 level, and look rock-solid, we could well see a new high coming for 2022.
Current sentiment metric towards gold show that traders have flipped to bearish, which is a good sign for further gains. The ActivTrader market sentiment tool shows that 58 percent of traders are bearish towards gold.
While this bearish sentiment bias is in play, it is mildly very bullish for gold price that after retail have, in the majority, remained long towards gold during the last few months.
For me, the current sentiment bias towards gold suggest that gold can start to rally as the majority of traders are now bearish towards the metal, which is typically a great sign for further upside.
Gold short-term Technical Analysis
The short-term technicals for the yellow metal show that a large head and shoulders pattern has been invalidated, which is technically bearish and could sparked further price losses in the yellow metal.
Looking at the four-hour price chart, the size of the bearish price pattern is pointing towards a coming price rally due to the $2,020 level due to the overall price projection.
Gold Medium-term Technical Analysis
The daily chart shows that gold remains a strong buy while trading above the $1,880 level, after bulls rallied the price above a massive wedge pattern.
With the bullish breakout we could easily see gold price tackling $2,000 again. If the technical situation becomes worse under the wedge, I would expect that the price of gold could hit $1,850.