Gold consolidates gains, remains around $1,320/oz

• Yellow metal supported by US dollar correction.
• Gold heads for highest daily close since late April.

Gold is consolidating gains but so far it was unable to make a sustainable run above $1,320/oz. The yellow metal extended gains earlier today following US CPI data. The weaker than expected inflation reading pushed the US dollar to the downside. The US Dollar Index is having the worst day in a month, correcting lower from 2018 highs.

Data and bond yields weakened the greenback. The CPI rose 0.2% in April, less than the 0.3% forecast. While the 10-year yield pulled back further below 3% and fell to 2.95% before rebounding to 2.97%. Some analysts also signal Iran-US tensions as another factor supporting the demand for gold.

Today the metal peaked at $1,322.80 the highest level since April 30. Afterward trimmed gains finding support above $1,315. Recently moved back to the upside and it was hovering slightly below $1,320 holding the bullish tone intact.

Levels to watch

The upside remains limited by the $1,320 area and the 20-day moving average. A consolidation on top of the mentioned level could open the doors to more gains. The next resistance might be seen at $1,325 followed by $1,332. On the downside, support levels could be located at $1,315, $1,309 and $1,303 (weekly low).