- USD climbs to 16-month tops and keeps exerting downward pressure.
- Improving risk-appetite dents safe-haven status and add to the selling bias.
Gold remained under some selling pressure for the third consecutive session and is currently placed at near three-week lows, just above $1215 level.
The precious metal extended its corrective slide from over three-month tops, set last Friday, and was being weighed down by a combination of negative forces.
The prevailing bullish sentiment surrounding the greenback, with the key US Dollar Index hitting 16-month tops on Wednesday, was seen as one of the key factors weighing on the dollar-denominated commodity.
This coupled with a continued recovery in risk-sentiment, as depicted by a positive tone around equity markets, further dented the precious metal’s perceived safe-haven status.
Optimistic comments by the US President Donald Trump, predicting a “great deal” with China, eased fears of any further escalation of a trade war and boosted investors’ appetite for riskier assets – like equities.
Meanwhile, a follow-through pickup in the US Treasury bond yields, amid firming prospects for a gradual Fed rate hike move beyond 2018, further dampened demand for the non-yielding yellow metal.
It would now be interesting to see if the commodity is able to find any buying interest at lower levels or the current pull-back marks the end of recent up-move from 20-month lows set in mid-August.
Traders now look forward to the release of the ADP report on the US private sector employment, due later during the early North-American session, in order to grab some short-term opportunities.
Technical levels to watch
A follow-through selling below $1215 level is likely to accelerate the fall towards $1211-10 intermediate zone ahead of the $1207 support before the metal eventually drops to test the key $1200 psychological mark.
On the flip side, the $1220 region (100-DMA) now becomes immediate resistance, above which the up-move could further get extended back towards $1225 supply zone en-route the $1232-33 strong hurdle.
