Gold Retreats Further to $1270 ahead of US CPI Data
After retreating from session high of $1288 on Monday, Gold turned back from $1280-81 area on Tuesday and dropped to $1269 despite of weakness in the greenback.
Weakening US Dollar is looked upon for increasing appetite for the precious metal. The yellow metal, however, continues to struggle in extending its momentum despite of the US Dollar weakness on Monday, which was led by disappointing Empire State manufacturing index print from the US. The trend again seems to get replicated on Tuesday, with the US Dollar largely trading flat to lower while Gold prices pared early gains to turn lower.
It is reasonable to believe that gold traders might be anticipating higher inflation print from the US later during NA session. Gold often trades inversely with the US Dollar and hence, an upbeat inflation number could push the US Dollar higher and depress prices for the yellow metal. However, with expectations of a Fed rate hike in June running extremely low, further downside might be limited in the near-term.
However, from technical perspective, the commodity has dropped back to a very important pivot near $1270 level, representing 20-day SMA. Hence, a sustained weakness below $1270 would open room for further intraday dip for gold prices.
Technical levels to watch
Weakness below $1270 would bring two-week low level support near $1256 back in sight, which if broken could further accelerate the fall towards $1250 round figure mark.
On the upside, $1280 now become immediate barrier to clear, which if conquered is followed by a strong resistance near $1288-90 area. Only a convincing strength above $1290 resistance would now pave way for retest of the very important psychological mark resistance near $1300 region.