After an initial spike to 4-day highs, gold came under some renewed selling pressure and inched back closer to last week’s over 2-week lows.
Currently trading around $1263-62 region, the yellow metal’s latest leg of downslide could be attributed to a mildly positive sentiment surrounding the greenback. Optimism led by a deal to keep the US federal government funded coupled with growing Fed rate-hike expectations helped the key US Dollar Index to move back above the 99.00 handle and was seen weighing on dollar-denominated commodities – like gold.
Adding to this, improving investors’ appetite for riskier assets – like equities, further dented the precious metal’s safe-haven appeal and collaborated to the weaker tone at the start of a new trading week.
Further losses, however, seemed limited amid holiday-thinned liquidity conditions, with European markets closed in observance of May Day and as market participants watch for any fresh developments around the US – North Korea stand-off.
Monday’s focus would be on the US treasury secretary Steven Mnuchin’s speech and the US economic docket, featuring the release of – core PCE price index, personal income / spending data and ISM Manufacturing PMI.
Technical levels to watch
Immediate support is pegged near $1260 area, below which the metal is likely to accelerate the slide towards the very important 200-day SMA support near $1253 region. On the upside, $1270 level now seems to have emerged as immediate resistance, which if cleared might trigger a short-covering bounce back towards $1275 horizontal resistance en-route $1279-80 hurdle.