“¢ Quickly reverses an uptick to over one-week tops, despite weakening USD.
“¢ Traders also shrugged off the ongoing downslide in the US bond yields.
“¢ Today’s release of the latest FOMC meeting minutes to provide fresh impetus.
Gold failed to capitalize on its early up-move and has now surrendered daily gains to currently trade in neutral territory, around the $1196-95 region.
In the latest US political drama, Michael Cohen’s lawyer said that his client had information regarding a Russian conspiracy. The news prompted some fresh US Dollar weakness and provided a minor lift to the dollar-denominated commodity.
However, the market reaction to the headline turned out to be rather short-lived, with the commodity quickly reversing early gains to over one-week tops, levels just above the key $1200 psychological mark.
Even the prevalent cautious mood around equity markets did little to boost the precious metal’s safe-haven appeal. Traders also seemed to have shrugged off the ongoing slide in the US Treasury bond yields, which tend to drive flows towards the non-yielding yellow metal.
Meanwhile, the latest leg of pull-back since the early North-American session could also be attributed to some repositioning trade ahead of today’s key event risk – the latest FOMC meeting minutes, expected to reaffirm the Fed’s confidence in the US economy and commitment to future gradual rate hikes.
Technical Analysis
The commodity has now corrected back closer to a short-term ascending trend-line support, held over the past one week or so. A sustained break below would mark the end of the recent corrective rally and turn the metal vulnerable to resume with its prior bearish trend.
A follow-through weakness below the mentioned support, currently near the $1194 area, is likely to accelerate the slide towards $1189 horizontal level before the commodity eventually drops to $1185-84 support area.
Alternatively, a sustained move beyond the $1200 mark would reaffirm the trend-line support and prompt some fresh short-covering rally towards testing the $1206 previous support now turned resistance.
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