Gold works its way back towards test of key near-term level, what's next?

<p>It has been a poor start to January trading for gold this year and things looked like it would continue yesterday. After the US CPI data, gold dipped lower to $2,013 levels but fell short of testing the key trendline support at around $2,009 before a reversal in the action. The rebound came amid a flurry of bids in bonds, taking yields lower.</p><p>And that is seeing gold put up a solid recovery to $2,039 now, posing a test of key near-term levels. In particular, the 200-hour moving average (blue line) at $2,041.54 is now in play and that is the key line in the sand in gauging the near-term bias for gold at the moment.</p><p>Since the turn of the year, gold has been struggling and is on a downtrend as seen above. The 100-hour (red line) and 200-hour moving averages have helped to keep sellers in control but is it time for a turnaround in the momentum?</p><p>I mean, even after the higher inflation numbers yesterday, bond yields have failed to really follow through on last week's action. And that could be a trigger for a turnaround in broader markets, including gold.</p><p>To validate such a conviction, buyers need to break back above the 200-hour moving average and trendline resistance at around $2,043. In doing so, that could help to push gold back towards the recent highs. However, to secure a firm break and weekly close above the 2020 highs around $2,073 might still to prove to be elusive for now.</p>

This article was written by Justin Low at www.forexlive.com.