Gold drops to fresh weekly lows, below $1240 level

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   •  A modest USD uptick exerts some fresh downward pressure on Friday.
   •  Weaker equities/bond yields fail to lend any support or stall the slide.
   •  Traders now eye US monthly retail sales for some short-term impetus.

Gold edged lower for the second consecutive session on Friday and weakened farther below $1240 level, hitting fresh weekly lows in the last hour.

The commodity extended this week’s retracement slide from five-month tops and traded with a negative bias for the fourth session in the previous five, erasing a part of last week’s goodish up-move.

A modest pickup in the US Dollar demand, which seems to have offset a combination of supporting factors, turned out to be one of the key factors exerting some fresh downward pressure around the dollar-denominated commodity. 

Meanwhile, a fresh wave of global risk-aversion trade, as depicted by renewed selling around equity markets and triggered by disappointing macro data from the world’s second-largest economy, failed to boost the precious metal’s safe-haven demand.

Even uncertainty over the Fed’s rate hike path in 2019, reinforced by the recent slide in the US Treasury bond yields, which tends to underpin demand for the non-yielding yellow metal, also did little to lend any support and stall the ongoing slide. 

Next in focus will be today’s US economic docket, highlighting the release of monthly retail sales data, which will be looked upon for some short-term trading impetus on the last trading day of the week. 

Technical levels to watch

A follow-through weakness could get extended towards the $1234 horizontal support, below which the metal is likely to extend the fall towards the $1228-27 region en-route $1221-20 area. On the flip side, the $1242 level now seems to act as an immediate resistance, which if cleared might lift the commodity back towards $1248-50 supply zone.

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