XAU/USD limited by strong support

Gold was driven by bears early on Tuesday who pushed the yellow metal down to the upper boundary of the breached wedge pattern and the 38.20% Fibo near 1,316.70.

The pair’s subsequent direction was determined by the US inflation release which introduced volatility in the market. As a result of this 45% surge, Gold dashed through the strong resistance of the 55-, 100– and 200-hour SMAs and was located at the 1,330.00 mark by Wednesday morning.

Technical indicators are strongly bearish in this session. However, it is unlikely that the aforementioned SMAs are breached until US fundamentals are released at 1230GMT.

The ultimate low should be the 1,315.00 mark, while gains are likely to be capped near 1,335.00.

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