“¢ A goodish pickup in the USD demand prompts some aggressive selling.
“¢ Fading safe-haven demand further aggravates the downward momentum.
“¢ Technical studies suggest an extension of the near-term bearish trajectory.
Gold continued drifting lower through the mid-European session and is currently placed at fresh six-month lows, around the $1255 region.
Having failed to benefit from escalating US-China trade tensions, initial signs of stability in the global financial markets was now seen weighing on the precious metal safe-haven appeal.
This coupled with a goodish pickup in the US Dollar demand aggravated the selling pressure and further collaborated to the dollar-denominated commodity’s slump to its lowest level since Dec. 18.
Today’s steep decline could also be attributed to technical selling, following the occurrence of a death-cross on daily charts, wherein a short-term moving average (50-day SMA) crosses below the longer-term moving average (200-day SMA).
Meanwhile, a sustained break below a medium-term ascending trend-line support, extending from Jan. 2017 through lows touched in July and Dec. 2017 reinforces a bearish set-up. Hence, a follow-through weakness, despite near-term oversold conditions, remains a distinct possibility.
Technical levels to watch
Immediate support is pegged near the $1251-50 area, below which the metal might continue to slide towards $1245-44 intermediate zone en-route Dec. 2017 lows support near the $1237-36 region.
On the flip side, any recovery attempts back above $1260 level might now confront immediate resistance near the $1266 area, which if cleared might trigger a short-covering bounce towards $1272-73 barrier.
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