Gold weakens for second straight session as investors await Fed decision
|Gold weakened for second consecutive day on Wednesday and extended its retracement from one-month highs touched at the beginning of this week.
A fresh wave of global risk aversion trade, as depicted by resumption of the bullish trend in equity markets was seen weighing on the precious metal's safe-haven appeal. This coupled with a modest US Dollar recovery, which tends to dent demand for dollar-denominated commodities, further collaborated to yellow metal's retracement back below $1250 level.
• US Dollar cautious near 94.00 ahead of FOMC
The current pullback, however, might still be seen as buying opportunity amid growing concerns over the US President Donald Trump's economic stimulus plans and fading expectations of an aggressive Fed monetary policy tightening cycle.
Hence, the focus would remain on the outcome of a two-day FOMC meeting ending Wednesday, where hints over the Fed's intention to unwind its massive $4.5 trillion balance sheet and timing of next rate hike action would act as a catalyst determining the next leg of directional move for the non-yielding metal.
• FOMC Preview: No Fireworks expected – Nomura
Technical levels to watch
Immediate support is pegged near $1241-40 region, below which the fall could get extended back towards the very important 200-day SMA support near the $1230 region. On the upside, 100-day SMA near the $1248 area now seems to act as an immediate hurdle, above which the metal is likely to aim towards surpassing $1259-60 strong horizontal resistance and head towards testing its next hurdle near $1266-67 zone.
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