Gold inter-markets: further consolidation around 200-DMA ahead of Friday’s US GDP print
|Gold staged a minor recovery on Thursday amid prevalent global risk-off mood but lacked a firm near-term direction and has been oscillating around the very important 200-day SMA.
Currently trading with minor gains around $1269, drop in the Volatility Index (VIX) pointed to easing risk-aversion and provide a minor boost to riskier assets - like equities, as depicted by a minor recovery in the broader US equity index (S&P 500), and capped the precious metal's up-move on Thursday near 200-day SMA. Improving investor risk-appetite tends to dent the metal's safe-haven appeal.
Moreover, bullish sentiment surrounding the greenback, reaffirmed by the USD/JPY pair's appreciating move, is also weighing on dollar-denominated commodities - like gold, and restricting any sharp up-move for the metal. Meanwhile, recovery in the US longer-term (30-years) Treasury bond yields is supportive of market expectations of an eventual Fed rate-hike action by the end of this year and is exerting some selling pressure around the non-yielding metal.
The yellow metal, however, has been struggling for a firm direction as investors await for further clarity over the timing of next rate-hike action by the US Federal Reserve and US presidential election next month. Hence, Friday's release of advance US GDP print for the third quarter of 2016 would be the next big trigger that would help investors to determine the commodity's next leg of directional move.
A stronger-than-expected growth would reinforce market expectations that the Fed would eventually move towards raising interest rates and is likely to pave way for further near-term depreciating move for the precious metal. Till then, gold is likely to remain confined within a narrow trading band around 200-day SMA.
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