Gold bounced from dangerous zone on Thursday to fully reverse post-US CPI drop and fade immediate risk of eventual clear break below pivotal ($4120/00 support zone).
The metal price fell on hotter than expected US inflation in September that initially boosted bets for more aggressive Fed’s stance on monetary policy, but following comments from Fed officials that the central bank should stay on tightening path but with no urgency for action in October meeting, cooled the sentiment.
Another false break lower suggests that larger bears remain in play but need more evidence to spark final push through cracked $4120/00 levels that would signal bearish continuation and expose key $4000 support zone.
Technical picture on daily chart hasn’t changed significantly, as momentum indicators remain in negative territory but climbing that supports near-term view of extended sideways mode, while MAs are in bearish configuration.
However, near-term action is expected to remain biased lower while the price stays in the lower side of the range ($4070/$4230) that would keep $4120/00 supports at increased risk.
Investors await release of US PPI data today for more information, with hotter than expected producer price index, likely to put more pressure on the yellow metal.
Res: 4170; 4201; 4230; 4245
Sup: 4100; 4066; 4033; 4000
