Gold fades a bullish spike, quickly retreats back to $1320 level
• Jumps to fresh multi-day tops on fresh USD selling.
• The bullish move runs out of steam on fading safe-haven demand.
Having dropped to an intraday low level of $1313, gold caught some strong bids and surged to multi-day tops during the early NA session.
A fresh wave of US Dollar selling emerged following the release of latest US inflation figures and was seen one of the key factors underpinning demand for dollar-denominated commodities - like gold.
The CPI print eased fears of rising inflationary pressure and further reaffirmed that the Fed would stick to its plan to raise interest rates gradually. The same was evident from a sharp retracement in the US Treasury bond yields and provided an additional boost to the non-yielding yellow metal.
The bullish momentum, however, already seems to have run out of steam and was being weighed down by fading safe-haven demand amid improving appetite for riskier assets, as depicted by a strong rally in the US equity markets.
Technical levels to watch
Bulls might continue to try and defend the $1315-13 support, which if broken would turn the commodity vulnerable to slide towards testing 100-day SMA support near the $1303-02 region.
On the upside, sustained move beyond $1325-27 area now seems to trigger a short-covering rally towards the $1333-35 zone en-route $1340 supply zone.