Gold prices have pulled back slightly after reaching a key resistance level, following a strong rally driven by declining US Treasury yields and escalating geopolitical tensions. Investors are now taking a cautious approach ahead of the release of crucial US inflation data.  

Yields and Geopolitical Risks as Key Drivers

The recent surge in gold prices was largely attributed to expectations of more aggressive interest rate cuts by the Federal Reserve. Lower bond yields, which typically correlate negatively with gold prices, have created a favorable environment for the precious metal. Additionally, heightened geopolitical tensions in the Middle East have boosted gold’s safe-haven appeal.  

However, the market is now focused on the upcoming release of US Producer Price Index (PPI) and Consumer Price Index (CPI) data, which will provide further insights into inflation trends and potential monetary policy adjustments.  

Technical Analysis: Short-Term Consolidation Expected

Gold is currently trading within a range, suggesting a period of consolidation before a potential breakout in either direction. A bearish engulfing candlestick pattern suggests a potential short-term pullback towards the lower end of the range.  

A decisive break above the range resistance could indicate a continuation of the uptrend, with potential targets at the $2,550 level. Conversely, a breakdown below the range support would signal a resumption of the downward trend.