Gold flirting with 1-year lows amid stronger USD

   “¢   USD regains positive traction and prompts some fresh selling.
   “¢   A goodish pickup in the US bond yields adds to the bearish pressure.
   “¢   Fading safe-haven demand does little to lend any support.

Gold struggled to build on overnight modest recovery attempt from one-year lows and came under some renewed selling pressure on Thursday.

Investors looked past yesterday’s disappointing US housing market data and the US Dollar caught some fresh bids, which was now seen as one of the key factors prompting some fresh selling around dollar-denominated commodities – like gold.  

Meanwhile, upbeat economy outlooks from the Fed Chair Jerome Powell and the central bank’s Beige Book report further reinforced expectations about gradual Fed monetary policy tightening cycle. The same was evident from a goodish pickup in the US Treasury bond yields and further collaborated towards driving flows away from the non-yielding yellow metal.  

With growing trade war concerns failing to revive demand for traditional safe-haven assets, stability in global financial markets exerted some additional downward pressure and did little to assist the precious metal to register any meaningful recovery.

Today’s US economic docket, featuring the release of Philly Fed Manufacturing Index and the usual initial weekly jobless claims data, might provide some short-term trading impetus ahead of a scheduled speech by the Fed Governor Randal Quarles.

Technical levels to watch

A follow-through weakness below overnight swing low level of $1221 is likely to accelerate the fall towards $1214 horizontal zone before the commodity eventually drops to test July 2017 swing lows support near the $1205 region.  

On the flip side, the $1228-29 area now seems to have emerged as an immediate resistance, which if cleared might trigger a short-covering bounce back towards previous YTD lows, around the $1237-38 region.