Gold remains capped below $1315-16 supply zone, US CPI in focus


   •  Dovish Fed expectations continue to lend support and limit downside.
   •  Renewed USD buying/risk-on mood seemed to cap further up-move.
   •  Traders eye US consumer inflation figures for some meaningful impetus.

Gold held on to its mildly positive tone through the early European session, albeit struggled to make it through the $1314-16 immediate supply zone.

Having found decent support ahead of the key $1300 psychological mark earlier this week, the precious metal traded with a positive bias for the fourth session in the previous five and remained supported by growing market expectations that the Fed was in no hurry to tighten rates further.

However, a combination of negative forces - renewed US Dollar buying interest and the prevalent risk-on mood, which tends to dent demand for traditional safe-haven assets, kept a lid on any strong follow-through up-move for the dollar-denominated commodity.

The US President Donald Trump's overnight comments, saying that he could let the March 1 tariff deadline to slide for a while, fueled optimism over a breakthrough in the US-China trade talks and continued boosting investors’ appetite for riskier assets - like equities. 

Meanwhile, the greenback stalled its overnight corrective slide and regained some traction during the early European session on Wednesday, which further collaborated towards capping any meaningful up-move for the commodity, at least for the time being.

Moving ahead, today's US economic docket, highlighting the release of the latest consumer inflation figures, might influence Fed rate hike expectations and eventually provide some meaningful impetus for the non-yielding yellow metal later during the early North-American session.

Technical levels to watch

On a sustained move beyond the mentioned barrier, the commodity is likely to head towards testing the $1321 supply zone before eventually darting to multi-month tops, around the $1326 region. On the flip side, the $1307-06 region, followed by the $1302-$1300 region might continue to protect the immediate downside, which if broken might prompt some additional weakness further towards $1295-93 horizontal support.
 

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