After yesterday’s attempted tepid recovery move, gold came under some renewed selling pressure on Wednesday and struggled closer to 3-week lows.
Currently hovering around $1255 area, the precious metal was being weighed down by a modest greenback up-tick. In fact, the key US Dollar Index has now moved back closer to the 99.00 handle and was seen driving flows away from dollar-denominated commodities – like gold.
Moreover, receding geopolitical tensions continues to dent demand for traditional safe-haven assets and has failed to lend any support, with the yellow metal flirting with the very important 200-day SMA.
Meanwhile, a slight cautious opening in the European equity markets, as investors keenly await the out of the latest FOMC meeting for fresh clues over the timing of next Fed rate-hike action, helped limit losses at least for the time being.
Apart from the Fed announcement, Wednesday’s US economic docket also features the ADP private sector employment report and the ISM non-manufacturing PMI, which would be looked upon to grab some short-term trading opportunities.
Technical levels to watch
Bears would be eyeing for a decisive break through the 200-day SMA support near $1252-50 region, below which the metal is likely to accelerate the slide towards $1245-44 intermediate support en-route $1240 horizontal support. On the upside, any recovery attempt now seems to face immediate resistance near $1260 level, which if cleared should lift the commodity towards $1265-67 strong hurdle. A follow through strength beyond this important resistance might negate any near-term bearish bias for the commodity.