Gold digesting yesterday's sharp rebound from 100-DMA support

Gold was seen digesting previous session's rebound from 100-day SMA support and touched a 4-day high level near $1237 region. 

The metal, however, trimmed some of its early gains and is currently trading around $1233 level. Spot prices ticked higher on Thursday and rose to weekly high, supported by a follow through US Dollar retracement. A weaker greenback tends to benefit dollar-denominated commodities - like gold. Moreover, a pull-back in the US treasury bond yields was also supportive of the metal’s up-move during Asian session on Thursday.

The up-move, however, lacked momentum amid growing market optimism, , as depicted by a record run in the US equity markets, around the Trump administration's plans to unveil tax reforms. In addition to this, hawkish economic outlook from the Fed Chair Janet Yellen, pointing to an eventual Fed rate-hike action, was also seen capping further appreciating move for the non-yielding precious metal. Market expectations of faster Fed rate-hike moves were further reinforced by comments from the New York Fed President William Dudley, who expected a gradual removal of monetary policy accommodation and additional rate-hikes in the months ahead.

Later during NA session, the release of second tier US economic data – weekly jobless claims, building permits, housing starts and Philly Fed manufacturing index, would be looked upon for some short-term trading impetus. 

Technical levels to watch

Retracement back below $1230 level seems to drag the commodity back towards $1225 horizontal support, which if broken is likely to extend the downslide back towards 100-day SMA support near $1217 region. 

On the upside, momentum above $1237 level has the potential to lift the metal back towards recent multi-month highs resistance near $1245 region before aiming surpassing $1250 hurdle and aiming towards the very important 200-day SMA resistance near $1262 region.

 

    1. R3 1248.02
    2. R2 1241.31
    3. R1 1234.52
  1. PP 1227.81
    1. S1 1221.02
    2. S2 1214.31
    3. S3 1207.52