Having posted a session low level of $1240, gold gained some traction and spiked to fresh session tops during the early NA session.
The latest leg of a sharp spike over the past hour or so was solely led by a sharp US Dollar slide following the latest disappointment from the core CPI print. A weaker greenback tends to underpin demand for dollar-denominated commodities - like gold.
Meanwhile, today's weaker-than-expected inflation report might have dampened prospects of an aggressive Fed monetary policy tightening cycle and the same is evident from a sharp slide in the US Treasury bond yields, which provided an additional boost to the non-yielding commodity.
It would now be interesting to see if the commodity is able to form a firm base near current levels or is likely to extend its near-term bearish trajectory as the focus now shifts to the highly anticipated FOMC rate hike, due to be announced later during the NY trading session.
Technical outlook
The bullish divergence seen on the 4-hour chart shows the bearish move is running out of steam. Also, yesterday's doji candle shows indecision/bearish exhaustion in the marketplace.
"Still, it is too early to call a bottom as the falling channel is intact. Only a 4-hour close above the channel resistance (currently seen at $1247) would indicate the metal has made a low at $1237.22 and could yield rally to $1260 levels (38.2% Fib R of the recent sell-off). Such a move looks likely as a 25 basis point Fed rate hike has been priced-in" he added.
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The latest leg of a sharp spike over the past hour or so was solely led by a sharp US Dollar slide following the latest disappointment from the core CPI print. A weaker greenback tends to underpin demand for dollar-denominated commodities - like gold.
Meanwhile, today's weaker-than-expected inflation report might have dampened prospects of an aggressive Fed monetary policy tightening cycle and the same is evident from a sharp slide in the US Treasury bond yields, which provided an additional boost to the non-yielding commodity.
It would now be interesting to see if the commodity is able to form a firm base near current levels or is likely to extend its near-term bearish trajectory as the focus now shifts to the highly anticipated FOMC rate hike, due to be announced later during the NY trading session.
Technical outlook
The bullish divergence seen on the 4-hour chart shows the bearish move is running out of steam. Also, yesterday's doji candle shows indecision/bearish exhaustion in the marketplace.
"Still, it is too early to call a bottom as the falling channel is intact. Only a 4-hour close above the channel resistance (currently seen at $1247) would indicate the metal has made a low at $1237.22 and could yield rally to $1260 levels (38.2% Fib R of the recent sell-off). Such a move looks likely as a 25 basis point Fed rate hike has been priced-in" he added.
FOLLOW OUR TELEGRAM CHANNEL FOR MORE TECHNICAL ANALYSIS.
t.me/Bpifx17