Gold - Bottom in place?

• Long-legged doji signals indecision/bear exhaustion.
• A bullish follow-through will confirm a bottom.
• Bad inflation and resulting risk aversion could boost demand for gold.

Gold (XAU/USD) created a "long-legged" doji candle yesterday that marks a sharp rebound from the 100-day moving average (MA) support.

As per textbook rules, the candlestick pattern signals indecision in the marketplace. However, when viewed against the backdrop of the decline from $1,361.76 (Feb. 16 high), the doji candle indicates bearish exhaustion. That said, a bottom will be confirmed only if the follow-through today is positive.  

Bad inflation could boost demand for gold

Trump's tariff plan is being labeled as an indirect tax on consumers, i.e. it is seen raising the prospect of higher prices for American consumers and companies.  So, the "bad inflation" may boost hedge demand for the yellow metal. Also, higher prices and the faster pace of Fed tightening could hurt equities and boost haven demand for gold.

As of writing, the metal is trading at $1,316. Ahead in the day, buyers may step-in if the risk aversion in the equity market worsens.

Gold Technical Levels

A move above $1,325 (10-day MA) could yield rally to $1,332 (50-day MA). However, only a daily close above the 10-day MA would allow for a sustained rise to $1,341 (Feb. 26 high). On the downside, a break below $1,304.40 (100-day MA) would shift risk in favor of a drop to $1,300 (psychological level) and $1,293 (200-day MA).