Gold plummets to fresh YTD lows, remains vulnerable to slide further
| • Wednesday’s not so dovish FOMC statement continues to weigh on the commodity.
• US-China trade optimism dents safe-haven demand and adds to the bearish pressure.
• A subdued USD price action does little to lend any support or stall the ongoing slide.
Gold finally broke down of its mid-European session trading range and tumbled further below $1270 level to refresh YTD lows in the last hour.
The precious metal extended overnight sharp intraday pullback from the $1287-88 supply zone and remained under some intense selling pressure for the second consecutive session on Thursday. This comes after the FOMC statement showed a more upbeat assessment of the economic developments and dampened prospects for any rate cut this year, which was seen driving flows away from the non-yielding yellow metal.
This coupled with growing optimism over US-China trade negotiations, further fueled by reports that the world's two largest economies may announce a trade deal by next Friday, further weighed on the precious metal's safe-haven status. Meanwhile, a modest US Dollar uptick over the past hour or so further aggravated the pressure on the dollar-denominated commodity and collaborated to the ongoing bearish slide.
Today's sharp intraday decline could further be attributed to some follow-through technical selling, especially after the post-FOMC slide below the $1278-77 horizontal support and a subsequent break through the $1270 level. Hence, a follow-through weakness, amid some repositioning trade ahead of Friday's release of the closely watched US monthly jobs report (NFP), now looks a distinct possibility.
Technical levels to watch
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