Gold adds to overnight gains, hits 2-week tops beyond $1300 mark
| • The post-FOMC USD weakness helps build on the overnight bullish momentum.
• Reviving safe-haven demand/sliding US bond yields provide an additional boost.
• The US monthly retail sales data and ECB decision now eyed for fresh impetus.
Gold built on overnight sharp rebound from 6-day lows and jumped to two-week tops during the early European session.
The precious metal initially dropped lower after the Fed delivered a 25bps rate hike and signalled a slightly faster pace of interest rate hikes in 2018. The US Dollar, however, lost its upside momentum and helped the dollar-denominated commodity to bounce off lows.
Despite hawkish FOMC forecast, the USD continued losing ground on Thursday, which coupled with retracing US Treasury bond yields, provided an additional boost to the non-yielding yellow metal.
Adding to this, lingering US-China trade tensions, and deteriorating investors' appetite for riskier assets – like equities, underpinned demand for traditional safe-haven assets and remained supportive of the precious metal's follow-through up-move.
Meanwhile, technical buying above the key $1300 round figure mark could also be one of the factors further contributing the prevalent strong bid tone surrounding the commodity, with a move towards retesting the very important 200-day SMA now looking a distinct possibility.
Moving ahead, the highly anticipated ECB monetary policy update and the release of monthly US retail sales data would now be looked upon for some fresh impetus and in order to grab some meaningful trading opportunities.
Technical levels to watch
Immediate resistance is pegged near the $1307 region (200-DMA), above which the commodity is likely to accelerate the up-move towards $1314 supply zone en-route its next major hurdle near the $1321-22 region.
On the flip side, any weakness back below $1300 mark now seems to find support near the $1296-95 region, which if broken might drag the metal back towards $1290 intermediate level en-route $1287-86 support area.
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