- Gold drops to its lowest since mid-December
- Breaks beneath the crucial 2,000 mark
- Oscillators point to extreme oversold conditions
Gold experienced a massive downward spike in the four-hour chart following the hotter-than-expected US CPI report on Tuesday, dropping to a fresh two-month low. The magnitude of the decline has been reflected in the momentum indicators, which are currently deep in their oversold territories.
Should the retreat resume, immediate support could be found at the December bottom of 1,973. Failing to halt there, bullion could test the November support of 1,965. A violation of that region could set the stage for 1,946, which is the 123.6% Fibonacci extension of the 1,973-2,086 upleg.
On the flipside, if the price rotates higher, the 78.6% Fibo of 1,997 could provide initial resistance. Conquering this barricade, the bulls could attack the 61.8% Fibo of 2,016 ahead of the 50.0% Fibo of 2,029. Surpassing the latter, the price might then test the 23.6% Fibo of 2,060, which held strong three times in January.
All in all, gold plummeted to a two-month bottom on the back of a hotter-than-expected US inflation print. However, traders should not rule out a comeback as the price has reached extremely oversold levels.
