Gold breaks below $1200 mark, lowest since March 2017

   •  The ongoing USD bullish run keeps exerting downward pressure on Monday.
   •  Technical selling below one-week-old trading range adds to the selling bias.
   •  The global flight to safety does little to lend any support and stall the downfall.

Gold kept losing ground through the mid-European session and has now slipped below the key $1200 psychological mark, for the first time since March 2017.

The precious metal struggled to find any buyers and kept drifting lower at the start of a new trading week despite the global flight to safety, triggered by the ongoing currency crisis in Turkey. The Turkish Lira continued with its slump on Monday and weakened below 7.00 mark against the greenback amid worries over Turkish President Tayyip Erdogan’s influence over the economy and worsening relations with the US.

Meanwhile, the recent US Dollar bullish run remained uninterrupted and was seen as one of the key factors exerting some downward pressure on the dollar-denominated commodity. This coupled with a goodish pickup in the US Treasury bond yields, supported by firming prospects for a gradual Fed rate hike path, further collaborated towards driving flows away from the non-yielding yellow metal. 

The latest leg of a sharp downside since the early European session could also be attributed to some technical selling below the $1206 support area, the lower end of over one-week-old trading range, and the key $1200 psychological mark.

Technical levels to watch

A follow-through weakness below $1195-94 area (March 2017 low) is likely to accelerate the fall towards late Jan. 2017 lows support, near the $1188-86 region. On the upside, recovery attempts might now confront fresh supply near the $1206 support break-point, turned resistance, and any subsequent up-move might now be capped near the $1210-11 horizontal zone.