- A modest pullback in the USD helped gold regain some positive traction on Wednesday.
- An acceptance above the 23.6% Fibonacci Level and the 200 hourly SMA supports the prospects for additional gains.
- Bearish oscillators on the daily chart could limit the recovery movement.
The oro it eventually broke its intraday consolidation trading range and shot to close to a week high around the $ 1,723-24 region during the early days of the American session.
The US dollar trimmed its intraday gains and witnessed some selling in the last hour following the release of rather unimpressive US consumer inflation figures. This, in turn, was seen as a key factor that provided a modest boost to dollar-denominated commodities.
That said, the bullish mood prevailing in the market prevented bullish traders from making aggressive bets around the safe haven precious metal. Aside from this, a modest rally in US Treasury yields did even more to limit gains from the underperforming yellow metal.
From a technical perspective, gold has managed to find acceptance above the 23.6% Fibonacci level of the $ 1,814 – $ 1,677 drop. The bulls are now looking to take advantage of the momentum beyond the 200 hourly SMA, although any significant rally still seems elusive.
Technical indicators on the daily chart have just recovered from oversold territory, but are still in bearish territory. Furthermore, the RSI (14) on the 1 hour chart has already moved on the verge of entering the overbought zone.
Therefore, any subsequent positive movement is likely to face strong resistance and could still be seen as a short opportunity near the 38.2% Fibonacci level, around the $ 1,730 region. This, in turn, should limit the XAU / USD near the $ 1,739-40 bid zone.
The latter close to 50% of the Fibonacci level, which if decisively cleared would suggest that gold could have bottomed out in the short term. A fresh short hedging attack could push the XAU / USD towards the strong horizontal support break point of $ 1,760-65.
1 hour chart
Technical Levels
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