Gold drops to fresh weekly lows, around $1540 level
- The de-escalation of geopolitical tensions weighed on safe-haven assets.
- Gold extended previous session’s sharp retracement from multi-year tops.
Gold continued losing ground for the second consecutive session on Thursday and dropped to fresh weekly lows, around the $1540 region in the last hour.
The precious metal extended the previous session's sharp intraday pullback from multi-year tops – levels beyond the $1600 round-figure mark – witnessed some follow-through long-unwinding trade on Thursday amid fading safe-haven demand.
Gold weighed down by improving risk sentiment
Geopolitical tensions in the Middle East decrease significantly on Wednesday after the US President Donald Trump opted to impose new economic sanction on Iran rather than calling for further military action against the Islamic Republic.
The latest development led to a turnaround in the global risk sentiment and was evident from a positive move across equity markets. Markets unwound the risk-off moves, which eventually weighed heavily on traditional safe-haven assets.
The risk-on mood was further inforced by a strong intraday rally in the US Treasury bond yields, which extended some support to the US dollar and further played its part in driving flows away from the non-yielding yellow metal.
Meanwhile, the latest leg of a downfall over the past hour or so could further be attributed to some follow-through technical selling below weekly lows support near the $1555 region, paving the way for additional near-term weakness.
Moving ahead, there isn't any major market-moving economic data due for release from the US and hence, investors' appetite for riskier assets might continue to act as a key determinant of the commodity's move ahead of Friday's NFP report.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
