Gold Faces Crucial Test Above $4,340.60 Amid Inflation Concerns

Gold prices surged last week, ending at $4,401.40 per ounce, marking a 7.39% gain over the same period. However, traders are now focusing on whether gold can hold above the critical support level of $4,340.60.

The technical analysis suggests that if gold defends this level, it could open up the path towards its next objective: the 200-day moving average near $4,505.80. The short-term chart appears bullish, while the daily chart has shifted from neutral to mildly constructive.

But what happens on Wednesday's US consumer price index for July will be crucial in determining gold's direction. If inflation comes in below forecasts, it could put pressure on real yields, making gold more attractive as its opportunity cost declines.