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Gold takes a sharp U-turn, fades US CPI-led bullish spike to fresh 2-month tops
Gold faded US CPI-led knee-jerk spike to fresh two-month highs and turned sharply lower, now flirting with session lows near the $1282-81 region.
The precious metal jumped closer to the key $1300 psychological mark after today's softer US inflation figures showed that price pressures are not yet gaining momentum and reduced bets on any additional Fed rate hike action in 2017.
• US inflation misses on the downside, but price pressures will build - ING
However, a sharp recovery in the US Treasury bond yields, which tend to weigh on the non-yielding metal, might have prompted traders to take some profits off the table. This coupled easing concerns over the US-N. Korea standoff, as depicted by a sharp U-turn in equity markets, dented demand for traditional safe-haven assets and further collaborated towards aggravating the yellow metal's quick retracement from higher levels.
• US: Geopolitical tensions on the rise – BBH
The current pullback, however, might still be seen as a buying opportunity amid persistent US Dollar selling bias, which might continue to lend support to dollar-denominated commodities - like gold.
Next in focus would be speeches by Dallas Fed President Kaplan and Minneapolis Fed President Kashkari, which would be looked upon for some short-term momentum play on the last trading day of the week.
Technical levels to watch
A follow through retracement below $1280 level is likely to extend the corrective slide towards $1274 intermediate level ahead of $1269-68 strong horizontal support. On the upside, momentum back above $1288 level would reaffirm near-term bullish bias and hence, should pave way for continuation of the commodity's near-term upward trajectory towards reclaiming the key $1300 psychological mark.