Gold retreats to $1200 mark, Fed holds the key

Gold reversed all of its early recovery gains and is now flirting with the key $1200 psychological mark following the US economic releases.

Wednesday's data released from the US showed headline inflation (CPI) rose 0.1% inter-month, lifting the yearly rate to 2.7%, while core CPI came-in at 2.2% for February. Meanwhile, the monthly retail sales recorded a dismal 0.1% m-o-m growth during February, down from previous month's 0.6% (revised higher from 0.4%).

The readings were bang in-line with consensus estimates and provide a minor up-lift to the front end (2 & 5-yr) US treasury bond yields, which eventually is seen weighing on the non-yielding precious metal. 

However, the prevalent cautious sentiment, amid pre-FOMC nervousness is lending some support to the yellow metal's safe-haven appeal and is collaborating towards limiting any immediate downslide, at least for the time being. 

Investors on Wednesday keenly await an update on the Fed's economic projections, where a further hawkish shift is likely to reignite US Dollar bullish momentum and drive flows away from dollar-denominated commodities - like gold. 

Technical outlook

Carol Harmer, Founder at charmertradingacademy.com notes, "we either leave Gold alone till we get Fed out of the way...or buy it lower levels of the 1198/1195 area...tight stops below 1192....We lose 1192 and I feel 1180 will be the first stop with 1150 then following...."

"However....all the time we hold 1198/95 we look for the 1210/11 area....we would also go long above 1212.....if seen we look for 1218 then 1224/26...."