Gold nearly fell to new monthly lows yesterday following the higher than expected Core CPI but eventually recovered all the losses. I think the initial reaction was an overreaction, as I mentioned that an uptick to 0.3% wouldn’t have been enough to make the market to fully price in an October rate hike.In fact, after the knee-jerk reaction, the probability of a rate hike at the upcoming meeting stabilised around 30%, just 9% higher than the 21% probability seen before the CPI release.Today, we have US PPI on the agenda, but I don’t see it materially changing rate hike expectations. As a result, we could see a similar market reaction to yesterday’s CPI release, unless PPI surprises to the downside, in which case gold could stage a relief rally.On the geopolitical front, not much has changed. The Saudi Arabia–Houthi conflict continues, while US–Iran negotiations remain at a stalemate. Meanwhile, oil prices continue to rise amid the ongoing Middle East crisis.Looking ahead, the focus will remain on developments in the Middle East and the Fed’s policy outlook. A breakthrough in US–Iran negotiations could trigger a strong rally in gold, as traders would scale back rate hike expectations. A Fed that is slow to respond to rising inflation could also support gold if inflation expectations rise faster than nominal yields, pushing real yields lower.On the downside, a more hawkish Fed or a further escalation in the US–Iran conflict could put additional pressure on the precious metal. GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that gold(CFD contract) dropped again yesterday following the higher than expected core CPI but eventually recovered all the losses. We still have the downward trendline that could act as resistance. The sellers will likely lean on the trendline, with a defined risk above it, to position for a drop into the 3,885 level. The buyers, on the other hand, will want to see the price breaking higher to pile in for a rally into the 4,700 level next, with the 4,500 level as the first target.GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we can see more clearly the downward spike on the CPI release and then the recovery. From a risk management perspective, the sellers will have a better risk to reward setup around the trendline and the 4,228 resistance to keep targeting new lows. The buyers, on the other hand, will need the price to break above the trendline and the resistance to open the door for new highs and target the 4,400 level next.GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we have a minor downward trendline that could act as resistance. The sellers will likely lean on the trendline, with a defined risk above it, to keep pushing into new lows. The buyers, on the other hand, will look for a break to extend the pullback into the downward trendline and the 4,228 resistance. The red lines define the average daily range for today.UPCOMING CATALYSTSToday we get the US PPI, the US Retail Sales and the latest US Jobless Claims figures. We do have also Fed Chair Warsh speaking very late in the day in a fireside chat with IMF Managing Director Georgieva. He’s against forward guidance, so he might not say anything worthwhile, but it’s worth watching it. This article was written by Giuseppe Dellamotta at investinglive.com.