Home Gold recovers early lost ground to fresh 19-month low, lacks follow-through
FXStreet News

Gold recovers early lost ground to fresh 19-month low, lacks follow-through

   “¢   Near-term oversold conditions triggered some short-covering bounce.  
   “¢   A modest USD profit-taking remains supportive of the modest rebound.
   “¢   Risk recovery/positive US bond yields keep a lid on any further recovery.

Gold quickly reversed an early Asian session keen-jerk fall to $1160 level, fresh 19-month low, and has now turned higher for the day.

Currently trading around the $1177-78 region, testing session tops, the precious metal’s sharp rebound from the lowest level since Jan. 2017 could be categorized as a technical bounce amid near-term oversold conditions.  

The ongoing US Dollar profit-taking slide, which tends to underpin demand for dollar-denominated commodities – like gold, seems to be one of the key factors prompting some aggressive short-covering move.  

However, a slight improvement in investors’ appetite for riskier assets, as depicted by a mildly positive trading sentiment around most European equity markets, weighed on the precious metal’s safe-haven appeal.

This coupled with resurgent US Treasury bond yields and prospects for a gradual Fed rate hike path further collaborated towards keeping a lid on any strong follow-through for the non-yielding yellow metal.

Hence, it would now be interesting to see if the commodity is able to build on the recovery move or the uptick turns out to be a dead-cat bounce, against the backdrop of this week’s slump of over 4%.  

Technical levels to watch

Any subsequent up-move is likely to confront fresh supply near the $1180-81 area, above which the recovery move could further get extended towards $1193 horizontal resistance. On the flip side, $1170 level now seems to protect the immediate downside, which if broken might turn the metal vulnerable to head back towards retesting daily swing lows, around the $1160 region.
 

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.