Gold drops to fresh multi-week lows near $1250 level

Haresh Menghani FXStreet

Gold came under some renewed selling pressure on Monday and fell to the lowest level in around four weeks during early European session.

A positive opening in the European equity markets, pointing to improving investors' appetite for riskier assets, was seen weighing on traditional safe-haven assets and has been the sole driver of the precious metal's latest leg of fall in the past hour or so.

This coupled last week's hawkish Fed decision, supporting a modest up-tick in the US Treasury bond yields and underpinning the US Dollar, further dented demand for the non-yielding commodity and collaborated to the slide to its lowest level since May 24.

• US Dollar firmer, eyes on 97.00

Investors now look forward to this week's speeches from various influential FOMC members, starting with the Chicago Fed President Charles Evans speech on Monday, for some fresh impetus amid absent major market moving economic releases.

Technical levels to watch

Below $1250 level, the metal is likely to find support at 100-day SMA near $1247 region, which if broken is likely to accelerate the slide further towards the very important 200-day SMA support near $1240-39 region.

On the flip side, any recovery move above $1253 level now seems to confront immediate strong resistance near $1255 region, above which a bout of short-covering could lift the commodity back towards $1262 horizontal resistance.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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