“¢ A modest USD rebound prompts some fresh selling.
“¢ Fading safe-haven demand further adds to the pressure.
“¢ A sudden fall in the US bond yields might help limit downside.
Gold surrendered the majority of its early gains to one-week tops and is currently placed at the lower end of its daily trading range, around the $1297 region.
The precious metal failed to capitalize on the early strength and once again failed to build on/sustain a move above the $1300 mark. A modest US Dollar rebound from lows, which tends to weigh on dollar-denominated commodities – like gold, was seen as one of the key factors behind a sharp drop over the past hour or so.
This coupled with a positive opening in the US equity markets, which tends to undermine demand for traditional safe-haven assets, further collaborated to the precious metal’s retracement from an intraday high level of $1303.18.
However, a sudden fall in the US Treasury bond yields was now seen lending some support to the non-yielding metal and should help limit further downside, at least for the time being.
Looking at the broader picture, the commodity has been oscillating within a broader trading range over the past three weeks and hence, it would be prudent to wait for a decisive break before positioning for the next leg of directional move.
Technical levels to watch
Immediate support is pegged near the $1393-91 zone, below which the metal is likely to head towards testing $1288-87 horizontal support before eventually dropping to yearly lows, around the $1282 level.
On the upside, any meaningful up-move beyond the $1300 mark is likely to confront a stiff resistance near the very important 200-day SMA, around the $1307-08 region, which if cleared is likely to trigger a near-term short-covering bounce.
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