Gold surrenders majority of early gains, Fed policy statement holds the key
|Gold surrendered majority of its early recovery gains to $1316 and has now moved on the verge of breaking into negative territory.
The precious metal got an early boost from riving safe-haven demand after the US President Donald Trump threatened to "totally destroy" North Korea. Also collaborating to the early up-move was prevalent weaker sentiment surrounding the US Dollar, and sliding US Treasury bond yields, which tends to benefit dollar-denominated commodities - like gold.
The up-move, however, lacked any strong follow through momentum amid growing conviction that the Fed would eventually start unwinding its massive $4.5 trillion balance sheet. This coupled with expectations of additional Fed rate hike action by the end of this year further collaborated towards keeping a lid on any sharp up-move for the non-yielding commodity.
Hence, focus would remain on the accompanying rate statement, updated economic projections and the Fed Chair's Janet Yellen's post-meeting press conference, where any hawkish signals would pave way for extension of the metal's near-term corrective slide from yearly tops, touched earlier this month.
• Fed: Uncertainty about policy next year – Danske Bank
Technical levels to watch
A follow through retracement below $1310 level is likely to accelerate the fall back towards $1305-04 intermediate support before the metal eventually drops to sub-$1300 level.
On the upside, momentum beyond $1316 area (session top) could get extended towards $1320 level, above which the commodity is likely to dart towards $1330 horizontal resistance.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.