Gold slips to 7-week lows on USD recovery and risk-on mood
|Gold remained under some selling pressure for the third consecutive session and was hovering at a near seven-week low during early European session on Monday.
A modest pick-up in the greenback demand, with the key US Dollar Index extending Friday's recovery move from nine-month lows, was seen weighing on the dollar-denominated commodity. Adding to this, today's upbeat Chinese Caixin manufacturing PMI seems to have lifted investors' risk appetite and curbed the precious metal's safe-haven appeal.
USD will struggle to make much headway - Westpac
Meanwhile, a rise in global bond yields, on indications that major central banks would begin tightening monetary policies, further dented demand for the non-yielding metal and collaborated to the fall to its lowest level since May 17.
From a technical perspective, the commodity is flirting with the very important 200-day SMA support near $1235-36 region, which if broken decisively would confirm a fresh bearish breakdown and pave way for continuation of the near-term downward trajectory.
Later during early NA session, the release of US ISM manufacturing PMI would now be looked upon for some fresh trading impetus. In the meantime, bond yield dynamics and investors' appetite for riskier assets would drive sentiment around the commodity.
Technical levels to watch
Below $1235 level, the metal is likely to accelerate the slide towards $1227 horizontal zone en-route $1220-18 strong support. On the upside, recovery move back above $1240 level now seems to confront fresh supply at 100-day SMA near $1249 region and any further up-move might continue to be capped by a strong hurdle near $1253-55 region.
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