Gold consolidates in a range, just above $1230 level

   “¢   Subdued USD action/cautious mood helped limit any immediate sharp downside.
   “¢   Firming Fed rate hike expectations seemed to keep a lid on any strong up-move.
   “¢   The upcoming FOMC decision might help determine the near-term trajectory.

Gold extended its subdued price action at the start of a new trading week and remained confined in a narrow trading range, just above $1230 level.

A combination of diverging forces failed to provide any fresh impetus and assist the commodity to build on last week’s sharp rebound from over three-week lows.  

The US Dollar struggled to build on the post-NFP positive move and was capped by the growing uncertainty around the US mid-term elections. This coupled with the prevalent cautious mood underpinned safe-haven demand for the dollar-denominated commodity and helped limit any immediate sharp downside.

The positive factors, to a larger extent, were offset by firming market expectations that the Fed might continue raising interest rates even beyond 2018, which tends to drive flows away from the non-yielding yellow metal and eventually kept a lid on any runaway rally.  

Hence, the latest FOMC monetary policy updates, due to be announced on Thursday will now play an important role in determining the commodity’s next leg of directional move. In the meantime, today’s release of the US ISM non-manufacturing PMI will be looked upon for some short-term trading impetus during the early North-American session.

Technical levels to watch

Immediate resistance is pegged near the $1236-37 region, above which the metal is likely to target towards challenging three-month tops, around the $1243-44 area. On the flip side, a follow-through weakness below the $1230 level is likely to accelerate the fall towards $1222 horizontal zone en-route $1215 strong support.