Gold faded US CPI-led knee-jerk spike to fresh two-month highs and turned sharply lower, now flirting with session lows near the $1282-81 region.
The precious metal jumped closer to the key $1300 psychological mark after today's softer US inflation figures showed that price pressures are not yet gaining momentum and reduced bets on any additional Fed rate hike action in 2017.
However, a sharp recovery in the US Treasury bond yields, which tend to weigh on the non-yielding metal, might have prompted traders to take some profits off the table. This coupled easing concerns over the US-N. Korea standoff, as depicted by a sharp U-turn in equity markets, dented demand for traditional safe-haven assets and further collaborated towards aggravating the yellow metal's quick retracement from higher levels.
The current pullback, however, might still be seen as a buying opportunity amid persistent US Dollar selling bias, which might continue to lend support to dollar-denominated commodities - like gold.
Next in focus would be speeches by Dallas Fed President Kaplan and Minneapolis Fed President Kashkari, which would be looked upon for some short-term momentum play on the last trading day of the week.
Technical levels to watch
A follow through retracement below $1280 level is likely to extend the corrective slide towards $1274 intermediate level ahead of $1269-68 strong horizontal support. On the upside, momentum back above $1288 level would reaffirm near-term bullish bias and hence, should pave way for continuation of the commodity's near-term upward trajectory towards reclaiming the key $1300 psychological mark.
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