Gold is up 0.5% on the day to around $1,948 levels now but it has been a rather challenging last one week or so for buyers. We saw price crack back below the $2,000 mark last month and that continued towards a test of key support in the form of the 100-day moving average (red line).
That is now the key line in the sand for gold, as buyers are making a stand and not letting price fall through the level. Keep above and the overall bias will stay more bullish but break below and sellers will have incentive to start chasing a move to $1,900 next at least.
Looking at how things are playing out, it seems like we may be stuck in a tug of war around the key technical level above until we get to the US CPI and Fed decision next week.
Those will be the sort of make or break events for trading conviction as it will reverberate to the Fed outlook and the rates market. That in turn will have an impact on gold price as such.
For now, traders are still seeing slightly higher odds of the Fed not hiking next week but a lot can change once we see the results of the US CPI data on Tuesday. Until then, we may be caught in a bit more of a push and pull as sellers want to chase a technical break lower but buyers are finding enough conviction to hold their ground.