Gold trades with modest losses for the second straight session, below $1280

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   •  A modest USD uptick/stability in equity markets prompts some fresh selling.
   •  Dovish Fed expectations/partial US govt. shutdown might limit further downside.

Gold struggled to build on the overnight attempted rebound and remained under some selling pressure for the second consecutive session.

The precious metal failed to capitalize on the early uptick to the $1285 area, with a combination of negative forces contributing to the prevalent weaker sentiment for the fifth session in the previous six.

After yesterday’s volatile swing in the US equities, signs of stability returning back to the global financial markets dented demand for traditional safe-haven assets and prompting some selling around the precious metal.

This coupled with some buying seen around the US Dollar, despite a weaker tone around the US Treasury bond yields, exerted some additional downward pressure on the dollar-denominated commodity.

However, the partial US government shutdown and dovish Fed expectations might keep a lid on any runaway rally for the greenback and should help limit any sharp downfall for the non-yielding yellow metal.

Hence, it would be prudent to wait for a strong follow-through selling before confirming that the commodity might have already topped out near the key $1300 psychological mark and positioning for any further depreciating move.

Technical levels to watch

Any subsequent fall below the $1277-76 region might prompt some fresh technical selling and accelerate the fall further towards testing the $1270-68 strong horizontal support. On the flip side, the $1285 region now seems to have emerged as an immediate strong resistance, above which a bout of short-covering could lift the metal back towards $1294-95 heavy supply zone.
 

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