Gold struggles near 1-year low amid notable USD demand
| • Powell’s hawkish comments continue to underpin the USD and weigh on the metal.
• Firming Fed rate hike prospects exert some additional downward pressure.
• The positive mood around equity markets does little to lend any support.
Gold continued losing ground through the European trading session on Wednesday and is currently placed at one-year lows, around the $1222-23 region.
The Fed Chair Jerome Powell's upbeat comments on the US economic outlook triggered a fresh leg of a bullish move for the greenback. In fact, the key US Dollar Index has now moved back above the 95.00 handle and was seen as one of the key factors weighing heavily on the dollar-denominated commodity.
Powell's comments also suggested that uncertainty over trade policy will not prevent the Fed from raising interest rates gradually, which further collaborated towards driving flows away from the non-yielding yellow metal.
Meanwhile, the prevalent positive trading sentiment around European equity markets also did little to lend any support to the precious metal's safe-haven appeal and stall the ongoing fall to its lowest level since July 14, 2017.
Traders now look forward to the US housing market data in order to grab some short-term opportunities but the key focus would be on Powell's second round of testimony, this time before the House Financial Services Committee.
Technical levels to watch
A follow-through weakness below $1220 level is likely to find support near the $1216-15 zone before the commodity eventually drops to test $1207 support area. On the flip side, the $1227-29 region now becomes immediate resistance, which if cleared might trigger a short-covering bounce back towards $1238-40 support turned resistance.
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