Gold prices have rebounded firmly after hitting one-week lows of $4,073, rising past $4,100 in Asian trading on Thursday. This recovery follows a sharp sell-off triggered by stronger-than-expected US inflation data, which had initially pushed gold down by 1.5%.
The US Consumer Price Index (CPI) report showed annual core CPI rising 2.6% in September, surpassing market forecasts of 2.5%. This data increased the odds of an October Federal Reserve interest rate hike to 42%, up from 22%, boosting the US Dollar and Treasury yields. However, a Bloomberg report indicating China's quiet accumulation of US Treasuries through non-US custodians provided support to gold buyers.
Additional factors aiding gold's recovery include safe-haven demand due to escalating Middle East conflict and concerns over AI investment-led debt. Some Fed officials have also shown no urgency for rate hikes, further supporting gold's rebound. Traders now await US Retail Sales and Producer Price Index (PPI) data for further clues on the Fed's rate hike path.
Technically, gold remains in a bearish near-term tone, trading below key moving averages. Initial support is seen at $4,002.10, with resistance levels at $4,208.09, $4,245.61, and $4,334.44. The Relative Strength Index (RSI) suggests persistent downside pressure without outright oversold conditions.