Gold rallied on Wednesday, increasing the price of yellow metal to more than $1235 an ounce, following the release of some key economic news. The technical bias remains bullish because of a higher high in the recent downside move.

Technical Analysis

As of this writing, the yellow metal is being traded around $1238 an ounce. A hurdle can be noted near $1250.00, the psychological number ahead of  $1275, the trendline resistance zone and then  $1300, the psychological number as demonstrated in the given below daily chart.

On the downside, a support can be noted near $1200, the psychological number ahead of $1156, the horizontal support area and then $1133, the lower trendline support zone. The technical bias shall remain bearish as long as the $1337 resistance area is intact.

RBA’s Governor Speech

Reserve Bank of Australia governor Philip Lowe has denied the threat of a long undershoot of his 2-3 per cent inflation target but conceded that record-levels of household debt will complicate the task of normalising official interest rates. Warning that many households are suffering from a “sobering combination” of high debt and slow wages growth that will drag on spending, Dr Lowe acknowledged there was a real risk that businesses and consumers will come to think inflation won’t rebound. If inflation expectations are pushed lower in that way, that could entrench the low-rate, low economic growth, low wages trend of recent years – effectively producing a self-perpetuating spiral.

Trade Idea

Considering the overall technical and fundamental outlook, buying the precious metal around current levels appears to be a good strategy in short to medium term.