Spot Gold extended recovery leg and hit one-week high at $1336 on Wednesday, maintaining positive near-term tone on weaker dollar.
Tuesday’s close above falling 10SMA and today’s probe above sideways-moving 20SMA ($1334) were positive signals as daily techs are bullishly aligned.
However, the yellow metal failed to hold break above 20SMA at first attempt, due to lack of momentum.
Focus turns towards US inflation data, due later today, which is expected to generate clearer signal about Fed’s view on monetary policy in coming months.
Stronger than expected inflation numbers in January could be a catalyst for the Fed to speed up tightening policy and put gold price under increased pressure.
Conversely, inflation miss today would disappoint those advocating for more aggressive monetary policy and boost gold price.
Bullish scenario would open targets at $1343 (Fibo 61.8% of $1366/$1307 bear-leg) and $1350/51 (01/01 Feb double-top).
Conversely, weaker tone could be expected on close below 10SMA ($1327) which would risk bearish acceleration towards 1321 (Tuesday’s low) and $1314 (Monday’s low) in extension.

Res: 1331; 1334; 1337; 1343
Sup: 1327; 1321; 1316; 1314