With the dollar sagging slightly today, gold is finding reason to cheer on the rebound from last week. The precious metal is up another 0.4% today to $2,026 as it has now erased its post-CPI drop.

The rebound comes as buyers defended the 100-day moving average (red line) last week, before breaking back above $2,000. And the run higher has since gathered pace with gold now just down 0.6% on the month.

The volatile action in gold to start the year is a reflection of the big swings in market odds on central bank rate cuts pricing. And as things are settling down now a little with traders readjusting, gold is still finding itself supported.

I’d argue that bodes well for the precious metal in the bigger picture. However, there could be some lingering concerns from a technical standpoint.

The rebound off the 100-day moving average has been a textbook trade for chartists. But there is a potential pattern forming which is showing lower highs and lower lows. That could come back to bite at gold for a bit before we can really talk about a major breakout to $2,100 and beyond again.

For now, the upside momentum might be capped closer to the trendline resistance near $2,053.

This article was written by Justin Low at www.forexlive.com.