- A modest USD pullback assisted gold to regain some positive traction on Wednesday.
- Acceptance above 23.6% Fibo. Supports prospects for further gains.
- Technical indicator on warrants might keep a lid on the recovery move.
Gold finally broke out of its intraday consolidative trading range and shot to near one-week tops, around the $1,723-24 region during the early session. The US dollar surrendered its intraday gains and witnessed some selling in the last hour following the release of a rather unimpressive US consumer inflation figures. This, in turn, was seen as a key factor that provided a modest lift to the dollar-denominated commodity.
From a technical perspective, the commodity has managed to find acceptance above the 23.6% Fibonacci level of the $1,814-$1,677 downfall. Bulls are now looking to build on the momentum as price has breakout the bearish channel formation which was holding for more than a week.
Hence, any subsequent positive move is likely to confront stiff resistance and might still be seen as a selling opportunity near 38.2% Fibo. level, around the $1,730 region. This, in turn, should cap the XAU/USD near the $1,740 resistance zone. The latter near the 50% Fibo. level, which if cleared decisively will push the XAU/USD back towards the $1,760-65 strong horizontal support breakpoint.
4-hour MACD has diverged in favor of the bulls. MACD histograms has produced higher lows, contradicting lower lows on the price chart. That bullish divergence indicates a potential for a corrective bounce.
