By Barani Krishnan

Investor.com Gold rose almost 1% Monday. This is a break from the slow dance the market has been doing over the past few weeks, while bears constantly checked longs hoping to leap into the $1800 territory.

Gold’s most active contract on New York’s Comex, , settled up $14, or 0.8%, at $1,821.80 an ounce, after a session high just shy of $1,825. The benchmark gold futures contract saw the greatest percentage and one-day point gains since Jan. 19. It also had the highest settlement rate since Jan. 26.

Monday’s rally in gold came ahead of U.S. inflation data due over the next three days via the reading for January .

CPI’s previous reading was a 7.3% increase in December, marking the greatest inflation rise since 1982. Forecasts for CPI this time are for 7.3%. This could still be a high of 40 years, but there’s every chance that the reading will surprise more to the upside.

Investors typically buy gold to hedge against inflation. In theory therefore, gold should rally when U.S. pressures are so high.

However, the Federal Reserve monitors inflation to make decisions about the quantity and frequency of interest rate increases in America’s pandemic-era. They favor bond yields over gold and the dollar. 

The technical charts of gold have improved since last week, when it remained in the $1,800 range despite a robust U.S. Jobs report for January. To ensure rate increases don’t cause job losses, the Fed closely monitors the labor market.

Sunil Kumar Dixit from skcharting.com warns that while the Comex April gold contract may rise to $1830 it will not be in a straight line.

“As long as gold sustains above $1,808, we should be heading for $1,825 initially, then $1,830. The rally wouldn’t last very long I think. $1,830 should be the exhaustion level. The longs should be very careful with the highs.”