Gold flirting with daily lows, below $1340 level

• Improving global risk sentiment dented demand for traditional safe-haven assets.
• Weaker USD/firming Fed rate cut expectations might help limit deeper losses.

Gold edged lower through the mid-European session on Wednesday and is currently placed at the lower end of its daily trading range, around the $1535 region.
 
Bulls failed to capitalize on the overnight strong up-move to the $1550 area – back closer to multi-year tops set on August 23 – with a slight improvement in the global risk sentiment exerting some fresh downward pressure on the perceived safe-haven Gold.

Weighed down by fading safe-haven demand

Receding safe-haven demand was further reinforced by a goodish pickup in the US Treasury bond yields. In fact, the benchmark 10-year US bond yield was up more than 2% for the day, which further collaborated towards driving flows away from the non-yielding yellow metal.
 
However, a follow-through US Dollar pullback from multi-year tops set in the previous session, coupled with firming expectations of an aggressive rate cut move by the Fed later this month might continue to lend some support and help limit deeper losses.
 
Even from a technical perspective, Gold has managed to hold its neck above 100-hour SMA and a short-term ascending trend-line support extending from early-August swing lows, warranting some caution before confirming that the commodity might have topped out in the near-term.
 
Moving ahead, in absence of any major market-moving economic releases from the US, a scheduled speech by New York Fed President Williams might influence the USD price dynamics and contribute towards producing some short-term trading opportunities.

Technical levels to watch