• US CPI data above expectations triggers volatility across financial markets.
• Metals tumble and then rebound, erasing losses.
• XAU/USD back above $1830, still capped by the $1835 area.

Gold prices bounces sharply on a volatile session. Following CPI data, XAU/USD tumbled to $1821, hitting a two-day low. A few minutes later, it rebounded above $1830, approaching weekly highs. The rebound suggests some underlying strength, but it needs to break firm above $1835 to open the door to more gains.

USD soars, and then tumbles

Economy data from the US showed the annual CPI rate rose to 7.5% in January, the highest level since 1982, and above the 7.3% expected. The numbers reinforced rate hike expectations from the Federal Reserve and boosted the dollar across the board.

After the opening bell at Wall Street, the greenback reversed and erased all gains, as stocks also moved back to the upside. US yields pulled back after the post CPI spike to fresh month monthly highs.

The “buy the rumor, sell the fact” patterns favoured gold prices. XAU/USD is trading back above $1830. It still faces resistance at $1835, and a break higher could lead to more gains and a move toward $1850. If it fails to hold above $1830 on Thursday, then a corrective move seems likely. The initial support is seen at $1820, followed by $1815 and $1808.

Technical levels