Gold prices experienced sharp fluctuations on Friday, with trading stuck in a back-and-forth pattern during the day session that closely followed the anticipated 4300-4375 range. However, the release of CPI data triggered a sharp decline in the evening, with prices dipping to 4290 before staging a powerful rebound that pushed beyond 4375 and peaked at 4402 before pulling back. The daily chart closed as a bullish candlestick with upper and lower shadows, while the weekly chart ended with a medium bearish candle featuring a prolonged lower shadow.

Following last week's CPI report, market expectations for a Federal Reserve rate hike at this week's meeting have surged significantly, and this anticipation has directly capped the momentum in both gold and silver prices during the latter part of last week. With rate hike expectations continuing to build, gold bulls face limited upside potential in the near term, suggesting a soft and volatile downtrend. Once the negative news is fully priced in, the downside pressure on gold should diminish, potentially setting the stage for a significant rebound.

Where to focus today

Based on Friday evening's trading range, a strategy of selling at highs and buying at dips is recommended. On the downside, consider initiating long positions around the 4300 level with a stop loss at 4290, targeting 4360. On the upside, look to establish short positions near 4390 with a stop loss at 4402, aiming for a pullback to 4320.