Gold Review: Clings to modest recovery gains, but lacks any follow-through

   “¢   Reviving safe-haven demand helps stage a modest recovery from over one-week lows.
   “¢   The prevalent strong USD bullish sentiment keeps a lid on any meaningful up-move.
   “¢   The key focus remains on Friday’s closely watched US monthly jobs report.

Gold held on to its modest recovery gains through the mid-European session, albeit seemed struggling to build on the positive momentum.  

Reviving safe-haven demand amid uncertainties stemming from emerging market currency crisis prompted some fresh safe-haven buying and helped the precious metal to bounce off a short-term descending trend-channel support on the 1-hourly chart.

The uptick, however, lacked any strong follow-through buying and remained capped amid a broad-based US Dollar strength, which tends to curb demand for dollar-denominated commodities – like gold.  

Moreover, investors also seemed to refrain from placing any aggressive bets and preferred to wait for this week’s key event risk – the closely watched US non-farm employment details.  

The latest NFP report might provide fresh clues over the pace of Fed monetary policy tightening cycle and eventually help determine the next leg of a directional move for the non-yielding yellow metal.  

Technical Analysis

The commodity has been trending lower alongside a descending channel over the past one week or so. Meanwhile, the metal’s inability to move back above a downward sloping 100-hour SMA suggests that the current bounce from over one-week lows seems more likely to get sold into.  

Any further recovery might now confront fresh supply near the key $1200 psychological mark and is closely followed by the trend-channel hurdle, currently near the $1202 region. Only a convincing break through the mentioned barrier would negate the negative outlook and prompt some near-term short-covering move.

On the flip side, weakness below $1190 level is likely to get extended towards the trend-channel support near the $1187-86 region, which if broken should pave the way for a resumption of the commodity’s prior well-established bearish trend.