Gold steadies on improving outlook for global reflation

Gold prices steadied around the five-week low of $1206 levels after the upbeat Chinese PPI showed an improvement in the global reflation outlook.

Trades below 38.2% Fib

The metal sits below $1210, which is the 38.2% Fibonacci retracement of $1122.81-$1263.87. Prices have dropped for last five trading sessions largely due to the spike in the Fed rate hike bets.

Chinese PPI rose at a fastest pace since 2008, which means the World’s second largest economy is exporting inflation to the global economy.

However, the 10-yr treasury yield sits at the highest level since December 2015 in Asia and that is capping the recovery in the metal.

Gold Technical Levels

A break above $1210 (38.2% fib) would expose $1213 (50-DMA) and $1218 (5-DMA). On the other hand, a breakdown of support at $1200 (zero figure) could yield a sell-off to $1196 (Jan 19 low) and $1193.34 (50% fib).