Gold retreated on Wednesday from the previous day's eight-week high as the U.S. Labor Department said its Consumer Price Index rose 0.3 percent last month and 2.1 percent in the 12 months through December, the biggest year-on-year gain since June 2014. We expect a lot more aggressive rate hikes from the Fed in response to already rising inflationary pressures. Higher rates would boost the dollar and weigh on gold. data showing a pick-up in U.S. consumer prices lifted the dollar and U.S. Treasury yields. Gold prices extended losses after the Federal Reserve's latest Beige Book pointed to a jump in manufacturing and tight labor markets showing U.S. economic health. Still, uncertainty over Trump's policies ahead of his swearing-in on Friday is keeping the metal underpinned. On chart, the MACD and momentum index still point to a strong gold with strong support at the key mark of $1,200. Bullion can find resistance at the 50 percent Fibonacci retracement of $1,230.50 since last November. Silver pulled back along with gold, after rising to a two-month high at $17.33. But the MACD and momentum index still suggest a bullish tone with near-term resistance at the 50 percent Fibonacci retracement of $17.40 since last November and support at $16.80.
Dealing Room, ICBC Beijing Branch Yang Hui
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