• Reviving USD demand/surging US bond yields keeps exerting downward pressure.
• Cautious sentiment around equity markets does little to boost safe-haven demand.
• Today’s US retail sales to reignite Fed rate hike debate and provide fresh impetus.
Gold extended its steady decline the $1315 neighborhood and has now slipped back below $1310 level, or 4-day lows.
The precious metal extended last week’s retracement slide from over two-week tops, also coinciding with 100-day SMA hurdle, with a combination of negative factors exerting some additional pressure for the third consecutive session on Tuesday.
Easing US-China trade tensions kept pushing the US Treasury bond yields higher and underpinned the greenback demand, which eventually continued prompting some selling around dollar-denominated commodities – like gold.
Traders seemed to have largely negated the prevalent cautious sentiment around equity markets, which tends to benefit traditional safe-haven assets, with the US Dollar/US bond yield dynamics acting as key determinants of the precious metal’s decline through the mid-European session.
Today’s key focus would be on the release of US retail sales data, which might influence Fed rate hike expectations, especially after the recent softer US inflation figures, and provide some fresh directional impetus to the non-yielding yellow metal.
Technical levels to watch
From current levels, the very important 200-day SMA, currently near the $1306 region, could extend some immediate support, which if broken might turn the commodity vulnerable to head towards challenging the $1300 round figure mark.
On the flip side, any recovery attempts might now confront resistance near the $1314-15 region, above which a bout of short-covering could lift the metal back towards $1320-21 intermediate resistance en-route its next major hurdle near the $1326 region (100-DMA).