Gold fails ahead of $1300 mark, drops to session lows with US CPI in focus

Gold surrendered all of its early gains to 2-1/2 week highs and has now dropped to the lower end of daily trading range, around $1292 level. 

The precious metal stalled its recent upsurge and seems to have faced rejection near the $1300 handle. A modest US Dollar rebound, backed by the latest hawkish comments by Boston Fed President Eric Rosengren, has been one of the key factors weighing on dollar-denominated commodities - like gold.

   •  Fed’s Rosengren: low jobless & inflation outlook warrants tightening - BBGTV

Meanwhile, a slightly positive trading sentiment around European equity markets and indications of a positive opening in the US bourses also did little to lend any support to the yellow metal's safe-haven appeal and collaborated to the retracement from higher levels. 

The momentum, however, seemed lacking conviction as investors preferred to refrain from placing aggressive bets ahead of today's key US macroeconomic releases, especially the latest consumer inflation figures. 

Against the backdrop of Thursday's PPI print, which recorded the biggest gain since February 2012, the headline CPI print would be looked upon for indications that the inflation is indeed rising at a faster pace. 

   •  US: Focus on CPI inflation today – Wells Fargo

A stronger reading would revive hopes for gradual Fed monetary policy tightening cycle, even beyond December meeting, and eventually drive flows away from the non-yielding metal.

   •  US Sep CPI: Headline prices likely to increase 0.5% overall - Westpac

Technical levels to watch

Immediate support is pegged near $1290 level, below which the commodity could slide back to $1284 intermediate support ahead of $1280 area. 

On the upside, any up-move might continue to face fresh supply near $1300 mark, which if cleared should lift the metal towards its next major hurdle near the $1308-10 region.

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