Spot gold remains at the back foot on Wednesday and extends fresh weakness, after brief recovery from new 4 ½ month low ($1786) was capped by 200DMA ($1836).
Today’s reaction on strong rise of UK inflation in April was mild, despite the yellow metal is used as a hedge against inflation, with strong pressure on gold price being maintained by a robust dollar, supported by global geopolitical and economic uncertainty and expectations for further rate hikes, as the US central bank tries to bring raging inflation under control.
Technical studies on daily chart remain in full bearish setup, as bearish momentum continues to rise, moving averages are in full bearish setup and 10/200DMA’s are converging and on track to form a death cross pattern that would add to negative signals.
Bears face immediate support at psychological $1800 level (also the base of thin daily cloud), followed by Monday’s spike low at $1786, break of which would signal bearish continuation and expose supports at $1769 (Fibo 76.4% of $1676/$2070) and $1753 (15 Dec 2021 low).
Broken Fibo 61.8% of $1676/$2070 ($1826) marks solid resistance which should cap and maintain bearish bias.
Only sustained break above 200DMA would sideline bears.
Res: 1820; 1826; 1836; 1850
Sup: 1800; 1786; 1780; 1769
