Gold recovered to around $4,140 after a dip below $4,080, helped by a softer dollar and lower yields, though resistance near $4,200-20 remains.
The stronger-than-anticipated US CPI report knocked gold, with the metal briefly dipping beneath the $4,100 level yesterday. That decline took it to a low just under $4,080 before dip buyers returned to halt the slide.
The initial reaction seemed relatively simple, yet with the dollar and Treasury yields giving back their gains, gold is also bouncing back today. The metal is getting more breathing room once again, with the price now back near $4,140.
That puts the ball back in the buyers' court. Can they convert the bounce into something more lasting?
There is certainly some encouragement for buyers in the near term. The latest rebound again underscores the desire to protect the downside, with gold reclaiming $4,100 after yesterday's sharp drop. Even so, I would not get too carried away with the bounce just yet.
The key hourly moving averages still present a challenge, as the 100-hour and 200-hour converge near $4,150-64, an area that has acted as notable near-term resistance for the metal over the past weeks.
Beyond that, the $4,200-20 region remains the larger obstacle. There have been several attempts to push through this zone in recent weeks, only for sellers to repeatedly put an end to those efforts.
The daily picture also continues to argue for caution.
The $4,100-20 area has been a key support zone since the end of September, with the 78.6 Fibonacci retracement level at $4,117 also in play. Despite yesterday's brief break lower, buyers have mostly succeeded in keeping that broader support area intact.
That is not to say the downside pressure has disappeared altogether. Gold remains below its 100-day moving average of $4,245, adding another layer of resistance on top of the already stubborn short-term zone around $4,200-20.
For now, dip buyers appear to have done just enough to prevent a more decisive breakdown after the US CPI report. Still, that is not quite enough to suggest the momentum has shifted. Bulls will need to clear $4,200-20 as the first hurdle before building a stronger case.
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