Gold edges higher, inching back closer to multi-month tops

   •  Dovish Fed expectations keep the USD bulls on the defensive and helped regain traction.
   •  Bulls seemed rather unaffected by fresh US-China trade optimism/risk-on mood.
   •  Market participants now eye US consumer inflation figures for some fresh impetus.

Gold regained positive traction on the last trading day of the week and has now reversed previous session’s modest pull-back from closer to multi-month tops.

Against the backdrop of dovish FOMC meeting, the Fed Chair Jerome Powell reiterated on Thursday that the US central bank could afford to be patient and flexible with its monetary policy going forward. Powell echoed other Fed officials’ comments and further fueled expectations that the Fed will pause its monetary policy tightening cycle in 2019. 

The dovish Fed outlook continued benefitting the non-yielding yellow metal and kept the US Dollar bulls on the defensive, which provided an additional boost to the dollar-denominated commodity and remained supportive of the positive move through the Asian session on Friday.

Meanwhile, the up-move seemed rather unaffected by some renewed US-China trade optimism, following comments by US Treasury Secretary Steven Mnuchin late Thursday, saying that China’s Vice Premier Liu may visit Washington this month for higher-level trade negotiations, and the prevalent risk-on mood, which tends to dampen the precious metal’s safe-haven demand.

With the USD price dynamics and Fed rate hike expectations turning out to be key drivers of the commodity’s positive move, market participants now look forward to the release of the latest US consumer inflation figures, due later during the early North-American session, for some fresh impetus on the last trading day of the week. 

Technical levels to watch

The $1295-96 region might continue to act as an immediate hurdle, above which the commodity is likely to aim towards surpassing the $1300 mark and test July swing highs, around the $1306 area. On the flip side, the $1286 level now becomes immediate support and is closely followed by the $1280 region, which if broken might accelerate the fall further towards $1270-69 support zone.