Gold price rose on Wednesday, reversing a part of Tuesday’s 1.1% drop, sparked by hotter-than-expected US inflation data, which temporarily cooled expectations for rate cut in June.
Fresh gains suggest that markets believe, after digesting the data, that elevated inflation won’t have stronger negative impact on current expectations for the start of monetary policy easing.
Tuesday’s drop found ground above the initial support at $2141 (former record high of Dec 4), adding to signals of shallow correction before bulls regain control, as overall technical picture is firmly bullish.
Fresh recovery needs daily close above $2170 zone (5DMA / near 50% retracement of $2195/$2150 pullback) to validate renewed bulls and signal higher low at $2150.
However, strong rally in past three weeks when the metal gained over 8%, may prompt traders to collect some profits, keeping the possibility of deeper correction on the table.
Res: 2178; 2188; 2195; 2200.
Sup: 2150; 2141; 2136; 2114.
