Gold extended the record-break losing streak on Wednesday, dragging the price of yellow metal to less than even $1100 an ounce. The technical bias has already turned bearish due to a Lower High and Lower Low in the recent wave.
As of this writing, the precious metal is being traded around $1092 an ounce. A support may be noted around $1050, the psychological number ahead of $1042, the low of year 2009 and then $1000, another huge phonological level.
On the upside, the precious metal is expected to face a hurdle near $1109, the intraday high of yesterday ahead of $1159, a major horizontal support turned resistance and then $1200, the psychological level. The technical bias will remain bearish as long as the $1204 resistance area is intact.
RBA Inflation Forecast
The Reserve Bank of Australia (RBA) trimmed the Consumer Price Index (CPI)-a main gauge for inflation- forecast to 0.6% on Wednesday against the expectations of 0.5% vs the previous reading of 0.7%. The development might be seen as bullish for the Australian Dollar and consequently spurring short-term bullish momentum in the price of Gold because gold is positively correlated to the Australian currency.
Considering the overall technical and fundamental outlook, buying the yellow metal around current levels appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing below the $1050 support area as described above.