- Gold pares gains after post-inflation bounce
- US yields remain lower, pulling the dollar down with them
- Resistance levels remain above at key Fibonacci levels
Gold has rotated lower over the last couple of days after previously recovering on the back of encouraging US inflation data.
The decline in US yields that we’ve seen since the release has weighed heavily on the US dollar and given the yellow metal a real boost after having endured a pretty torrid May and June.
Is the recovery sustainable?
The rotation occurred around $1,960 which was the first notable test of resistance after breaking above $1,940 earlier in the week.
XAUUSD Daily
Source – OANDA on Trading View
It falls around the 38.2% Fibonacci retracement level – May highs to June lows – and now the focus will be on whether that prior resistance level – $1,940 – turns into support.
Confirmation of the breakout – which may come from the price now finding support at $1,940 as it was previously resistance – could be bullish although there remains plenty of resistance ahead.
If the price does trend higher from here, the next tests of resistance could come around $1,980 and $2,000 which are the 50% and 61.8% Fibonacci retracement levels of the above move, respectively. The latter is also a major psychological level.
