Gold falls for third day in a row, weighed down by stronger USD
| • USD recovery gains traction and prompts further selling.
• Rising US bond yields add to the downward pressure.
Gold prices continued to slide for the third straight session on Tuesday and dropped to a four-day low level, around the $1340 region.
A combination of negative factors, ranging from a follow-through US Dollar buying interest and diminishing demand for safe-haven assets kept exerting downward pressure on the precious metal.
The greenback has now started showing some signs of a meaningful bounce, after it fell to over three-year lows last week, and has been one of the key factors weighing on dollar-denominated commodities - like gold.
Adding to this, a goodish pickup in the US Treasury bond yields, amid growing expectations that the Fed might opt for a tighter monetary policy tightening cycle in 2018, was further seen driving flows away from the non-yielding yellow metal.
Meanwhile, the prevalent cautious sentiment around equity markets, with major global equity indices breaking their winning streak, did little to revive the commodity's safe-haven demand and stall the slide to near one-week lows.
It, however, remains to be seen if the recent downfall points to the formation of a near-term top or is being utilized as a fresh buying opportunity, as a hedge against concerns over rising inflationary pressure in the US.
Technical levels to watch
A follow-through selling pressure below $1338 level has the potential to drag the metal towards the $1331-30 region en-route $1326-27 horizontal support. On the upside, any recovery attempts might now confront immediate resistance near $1346 area and is followed by $1350 level, above which the commodity seems to head back towards testing $1358 supply zone.
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