“¢ Fails to benefit from reviving safe-haven demand and escalating US-China trade tensions.
“¢ Prospects of higher interest rates in the US kept a lid on any meaningful recovery.
“¢ A modest USD rebound/positive US bond yields add to the downward pressure.
Gold remained under some selling pressure for the second straight session on Tuesday and has now dropped back within striking distance of six-month lows, set last Thursday.
The precious metal extended overnight retracement slide from an intraday high level of $1272.60 and has failed to benefit from reviving safe-haven demand, amid intensifying trade dispute between the world’s two largest economies.
The supporting factor seems to have been largely negated by prospects of rising interest rates in the US, which was now seen as one of the key factors keeping a lid on any meaningful up-move for the non-yielding yellow metal.
Adding to this, a modest US Dollar rebound, supported by an uptick in the US Treasury bond yields, exerted some additional downward pressure around dollar-denominated commodity on Tuesday.
The downfall could also be attributed to some fresh technical selling, especially after last week’s break below a medium-term ascending trend-line support extending from Jan. 2017 through July/Dec. 2017 lows. Hence, a follow-through weakness, amid absent market moving economic releases, now looks a distinct possibility.
Technical levels to watch
Weakness below $1261 area (multi-month lows) is likely to accelerate the fall towards $1255 intermediate level en-route $1250 support area. On the upside, any recovery attempt is likely to confront fresh supply near the $1270 level and is followed by overnight swing high resistance near the $1273 region, which if cleared might trigger a short-covering bounce back towards $1280 area.
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