“¢ Renewed USD weakness helps regain some positive traction on Wednesday.
“¢ Cautiousness ahead of Trump-Junker trade talks provides an additional boost.
“¢ Fed rate hike prospects might continue to keep a lid on any meaningful up-move.
Gold edged higher through the early European session on Wednesday and is currently placed at the top end of its daily trading range, above $1225 level.
After yesterday’s good two-way moves, the precious metal regained some positive traction and could be headed back towards overnight swing high. Some renewed US Dollar weakness was seen as one of the key factors boosting demand for dollar-denominated commodities – like gold.
This coupled with some nervousness ahead of a crucial trade-related meeting between the US President Donald Trump and European Commission President Jean-Claude Juncker extended some additional support to the precious metal’s safe-haven appeal.
Meanwhile, the ongoing slide in the US Treasury bond yields remained supportive of a mildly positive tone surrounding the non-yielding yellow metal, albeit Fed rate hike prospects might continue to keep a lid on any meaningful up-move.
Looking at the broader picture, the commodity has struggled to register any meaningful recovery from one-year lows set last Thursday and the recent price action clearly suggests increasing selling interest on every attempted up-move.
Hence, it would be prudent to wait for a strong follow-through buying interest before confirming that the commodity might have bottomed out and traders start positioning for any further up-move in the near-term.
Technical levels to watch
The $1230 area might continue to act as an immediate strong resistance, above which a fresh bout of short-covering could lift the metal further towards $1240-42 supply zone. On the flip side, the $1222-21 zone now seems to have emerged as an immediate support, which if broken might turn the commodity vulnerable to head back towards testing YTD lows, around the $1212-11 region.
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