By Barani Krishnan

Investing.com  — A couple of months ago, the fizzling of a geopolitical event like Ukraine-Russia might have just taken the bottom out of gold.

On Tuesday, Bullion fell on first reports from Moscow that Moscow was reportedly reducing Russian forces at the Ukraine border.

But as quick as the drop was the rebound from the lows, culminating in a finish that barely hurt gold’s upward momentum built up over the past six weeks. Interestingly, Tuesday’s move down only came after a new three-month high of ​​above $1,880.

Gold was helped by data that showed the U.S. Producer Price Index increased more than forecast in January. Producers were being paid less for their output, which seemed to be exacerbate inflation. Inflation has been expanding at an alarming rate over the past 40 years.

U.S. stock rallied despite the fact that PPI was higher, mainly because the Federal Reserve won’t be too aggressive in its March rate hike. It was a lifeline for gold.

At settlement, gold’s most active contract on New York’s Comex, , was down just $13.20, or 0.7%, at $1,856.20 an ounce. It fell more than $23 from the prior day’s close to hit session low of 1,845.55.

This low was achieved after a $1,881.60 surge, which had marked an increase since mid-November.

“Optimism that Russia could pull back some troops was the primary domino that sent gold lower,” said Ed Moya, analyst at online trading platform OANDA.

“Gold was ripe for some profit-taking but a sustained move lower might not happen as Wall Street remains mostly confident that the Fed won’t overtighten policy this year.”

Bullion started January above $1,800, then fell to around $1,781 before systemically gaining strength by breaking past one resistance point after another — first at $1,830, then $1,850 and on Monday at $1,870 (which incidentally marked a three-month high too).

It’s this organic, block-upon-block build that’s giving confidence to those following bullion’s charge since the start of the year that it isn’t going to stop until it reaches at least $1,900 — and could very likely continue thereafter in a bid for a new record high above $2,000.

“For sure, gold is on a breakout, not fake-out,” said Sunil Kumar Dixit, chief technical strategist at skcharting.com. “The bullish mood is all pervasive across major time frames, be it daily, weekly and monthly, with strong stochastics and RSI”