Gold struggles near six week lows, below $1185 level

   “¢   The post-FOMC USD rally pauses and helps limit further downside.  
   “¢   Weaker US bond yields/risk-off mood extend some additional support.
   “¢   Gradual Fed rate hike prospects to keep a lid on any meaningful up-move.

Gold seesawed between tepid gains/minor losses through the early European session on Friday and held within striking distance of six-week lows.  

The post-FOMC US Dollar rally got an additional boost on Thursday following the release of upbeat US economic data and was seen as one of the key factors weighing heavily on the dollar-denominated commodity. With the USD consolidating overnight strong gains, a combination of supporting factors eased the bearish pressure and helped limit deeper losses, at least for the time being.  

A mildly softer tone surrounding the US Treasury bond yields extended some support to the non-yielding yellow metal. This coupled with the prevalent risk-off mood across European equity markets, primarily led by concerns over Italy’s budget proposal further underpinned the precious metal’s safe-haven demand.  

However, a hawkish assessment of the latest FOMC statement, reinforcing the expectation that the Fed will stick to its gradual monetary tightening cycle, might continue to keep a lid on any meaningful attempted recovery for the non-yielding yellow metal.

Later during the early North-American session, second-tier US economic data will now be looked upon for some short-term trading impetus on the last day of the week. Nevertheless, the commodity remains on track to end in red for the fourth week in the previous five.  

Technical levels to watch

A follow-through selling below $1180 level is likely to accelerate the fall further towards the recent closing lows support near the $1174 region. On the flip side, $1185 level is likely to act as an immediate resistance, above which a bout of short-covering could lift the metal further towards $1190-92 supply zone.