Gold surrenders tepid gains on renewed USD strength
|Gold continued with its range-bound price action on Tuesday and remained closer to Monday's 10-month lows following bleak safe-haven demand amid mixed cues from European equity market.
Currently trading around $1170 level, nearly unchanged from yesterday's closing level, the yellow metal failed to hold on to Monday's recovery gains in reaction to a 'NO' vote to Italian Prime Minister Matteo Renzi’s constitutional reforms proposal in a referendum on Sunday. The metal subsequent dropped to test its lowest level since Feb. 5 after New York Fed President William Dudley supported gradual interest rate-hikes, which drove investors away from the non-yielding precious metal.
Moreover, growing expectations of aggressive fiscal stimulus from Trump administration is adding on to the optimistic view for a strong US economic growth in 2017 and is further weighing on the yellow metal's safe-haven appeal. Adding to this, a near-term US Dollar consolidation, following its post-US election strong rally to multi-year highs, has further restricted any swift recovery for dollar-denominated commodities - like gold.
Technical outlook
Carol Harmer, Founder at charmertradingacademy.com, notes, "Now we are holding this 1170 support...short term charts are a bit overcooked on the downside...so we should be able to see another period of correction today....we are looking for the market to hold above 1170/1165 and try and move forward looking once more to test the 1180 to 1190 resistance....failure to break 1190 puts the pressure back firmly to the downside and leaves the way clear for another test of 1160...."
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