• Firming Fed rate hike prospects prompt some aggressive selling.
• USD fails to build on post-data up-move and helps recover lost ground.
• Reviving safe-haven demand provides an additional boost.
Gold quickly reversed the US CPI-led knee-jerk fall and is now headed towards the top end of its daily trading range.
Today's strong US consumer inflation figures increased prospects for 4 Fed rate hikes in 2018 and prompted some aggressive selling around the non-yielding yellow metal. This coupled with a goodish pickup in the US Dollar demand exerted some additional downward pressure on dollar-denominated commodities - like gold.
The USD, however, struggled to build on its post-data gains and helped the commodity to regain some positive traction. Adding to this, a sharp fall in the US equity markets provided an additional boost to traditional safe-haven assets and further collaborated to the precious metal's sharp intraday recovery of around $17.
Currently holding with modest gains for the third consecutive session, it remains to be seen if bulls are able to maintain their dominant position or the up-move once again meets with some fresh supply at higher level amid firming Fed rate hike expectations.
Technical levels to watch
A follow-through up-move is likely to confront resistance near $1340 level, above which the metal seems all set to challenge the $1348-50 supply zone. On the flip side, $1332 level now seems to protect the immediate downside, which if broken could accelerate the fall back towards $1326 horizontal level en-route $1318 support.
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