Gold dips after encouraging inflation data

This morning’s move in gold looked constructive from a bullish perspective, although prices dipped soon after today’s CPI release which showed a continued decline in inflation. It now looks as if we’ll see a test of support at $2,450. Yesterday saw a shallow pullback, which followed on from Monday’s sharp gains. Despite this, gold remains tantalisingly close to taking out its record intra-day high of $2,483 from mid-July. Should it manage to push above here, then we should expect to see interest pick up as gold closes in on the psychologically significant $2,500 level. On the flip side, we should expect some caution from fresh buyers given the deep sell-offs that have followed every rally each month since April this year. Nevertheless, these have all proved to be good buying opportunities if one can get over the fear factor. Silver’s progress has been more laboured this week, and it has yet to break convincingly above $28 per ounce, let alone get back above $30. For now, silver is shadowing its more glamourous cousin. But while its dangerous to extrapolate from past events, when silver does decide to play catch-up, it often does so with some vigour.