Gold drops to one-week lows, around $1335 level on stronger USD

Haresh Menghani FXStreet

• Follow-through USD demand continues exerting downward pressure.
• Risk-off mood fails to revive safe-haven demand and lend support.
• All eyes remain glued to Wednesday’s FOMC decision.

Gold remained under some selling pressure for the second consecutive session and has now dropped to one-week lows, around $1335 level.

The precious metal extended its steady decline from an 18-month high level of $1366, touched last week, and was now being weighed down by a goodish US Dollar demand.

After the recent slump to the lowest level since December 2014, the greenback drew some support from the ongoing upsurge in the US Treasury bond yields and was eventually seen weighing on dollar-denominated commodities - like gold.

Even the prevalent risk-off environment, which tends to benefit the precious metal's safe-haven appeal, did little to lend any support, with the USD price dynamics acting as an exclusive driver of the commodity's move over the past 24-hours.

Moving ahead, the highly anticipated FOMC decision, scheduled to be announced on Wednesday, would influence investors' expectations over the timing for next Fed rate hike move and provide some fresh directional impetus for the non-yielding yellow metal.

Technical levels to watch

A follow-through selling pressure has the potential to continue dragging the metal towards its next support near the $1326-24 region, with some intermediate support near the $1330 level.

On the upside, any recovery move back above $1340 level now seems to confront resistance near the $1346-47 region and is followed by the $1350 supply zone.

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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