Gold consolidating recent gains to nearly 2-week high

Gold oscillated in a narrow trading band on Wednesday, consolidating two days of recovery gains to nearly two-week high.

Currently hovering around $1262 level, the ongoing recovery momentum in the British Pound helped ease US Dollar's bullish momentum and is benefitting dollar-denominated commodities - like gold. Moreover, signs of inflation picking-up in the US and UK, as depicted by the latest CPI print, provided an additional boost and lifted the precious metal on Tuesday. 

Meanwhile, the prevalent cautious sentiment in European equity markets is extending support to traditional safe-haven assets and assisting the yellow metal to hold on to recovery strength recorded since the beginning of this week to 7-day high. 

The commodity, however, remained capped below the very important 200-day SMA and as Carol Harmer, Founder at charmertradingacademy.com, notes "Gold has broken out of its little continuation pattern...now to confirm we need it to break 1265...If we can do this then we are on our way to 1275 and possibly then beyond..."

Technical outlook

Carol Harmer further writes, "we retraced 38.2 on the weekly charts and that was quite a bullish signal....this means that the weekly has superseded the daily pattern...and unless we see a close back below 1257 the market will now trade higher...if above 1275 we look for 1287 as a nearby targeted area....Weekly charts look oversold, and beginning to turn...so a move higher should not be surprising...Go with the price....look for further strength...and as I have said...oly a break below 1257 would make the market look weaker once more and see a return to the base of the pattern located down at 1245...."