Gold (XAU/USD) fades the strongest run-up in a week above $1,800, down 0.15% intraday around $1,801, during Wednesday’s Asian session.

The yellow metal jumped to the week’s high, also broke the monotony surrounding $1,800, after the US Consumer Price Index (CPI) miss clouded Fed tapering concerns the previous day. Even so, a recheck of the details suggests that the inflation figures are high enough to favor Fed hawks when they meet the next week.

The US CPI dropped the most since January on monthly basis to 0.3% versus 0.4% expected and 0.5% prior. The CPI ex Food & Energy also dropped below 0.3% expected and previous readings to 0.1% during August, marking the biggest fall in six months. Fed’s readiness to accept a bit higher inflation figures, terming it ‘transitory’, seems to be at test with almost double YoY figures than the US central bank’s previous target range of near 2.0%.

Following the key data release, the US 10-year Treasury yields dropped the most in a month before recently recovering to 1.29%. It should be noted that the S&P 500 Futures print mild gains by the press time even as the Wall Street benchmarks closed in the red the previous day.

In addition to the re-think over the Fed tapering, covid woes and geopolitical tensions also weigh on the market sentiment, underpinning the safe-haven demand of the US Treasury bonds, which in turn weigh on its yields.

Although the virus numbers from the Asia-Pacific region have eased of late, slower jabbing and doubts over the Delta variant spread challenge the market sentiment. Also weighing on the risk appetite, as well as gold, are hurricanes in the US and political tension in Canada and the Middle East.

Looking forward, gold traders will keep their eyes on the more clues to confirm the next week’s tapering from the Fed. The same highlights Thursday’s Retail Sales and Friday’s Michigan Consumer Confidence. For today, risk catalysts and the US Industrial Production for August, expected to ease from 0.9% to 0.5%, could offer intermediate moves.

Despite crossing an immediate trading range between $1,782 and $1,804, gold prices failed to provide a daily closing beyond the 200-DMA level near $1,809.

Also challenges the gold buyer is the sluggish MACD and RSI conditions, as well as double tops surrounding $1,834.

Meanwhile, 61.8% Fibonacci retracement of July-August fall, around $1,777, adds to the downside filters, other than the multiple lows marked recently near $1,782.

It’s worth observing that five-week-old horizontal support of around $1,758 will challenge gold bears below $1,777.

Overall, gold remains firmer but needs to cross the 200-DMA for giving controls to the bulls.

Trend: Pullback expected

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