Gold eases-off 3-1/2 month tops as USD rebounds

  • DXY recovery - the main driver.
  • Sept tops at 1365.80 still in sight?
  • Eyes on US ISM manufacturing PMI and Fed minutes.

The bullish momentum seen around Gold futures on Comex lost traction over the last hours, as the USD bulls jumped back on the bids after nursing losses for ten consecutive trading sessions. The USD index rebounds from almost four-month lows of 91.47 to now trade at session highs of 91.65, up 0.11% on the day.

The bounce in the greenback versus its major peers is mainly driven by a rebound in Treasury yields, as markets turn optimistic ahead of the first Fed event of this year, the FOMC Dec meeting minutes release

Moreover, a profit-taking rally in the buck cannot be ruled after the recent sell-off while a better tone seen around the Asian stock markets also dull the attractiveness of gold as a safe-haven.

Gold rallied to $ 1322.90, the highest levels since Sept 2017 in early trades, as technical buying underpinned amid strengthening demand from India, the world’s No. 2 gold consumer. India’s gold imports surged 67% in 2017 from the previous year to 855 tonnes, a GFMS report showed.

In the day ahead, all eyes remain on the US ISM manufacturing PMI and Fed minutes, which will help offer the next direction in the yellow metal.

Gold Technical Levels

Reuters technical analyst Wang Tao wrote: “Spot gold may break a resistance at $1,326 per ounce and rise towards the next resistance at $1,380 in three months, as suggested by its wave pattern and a Fibonacci ratio analysis.”

Mohammed Isah, Head of Research at FXTechstrategy.com, noted: “On the downside, support comes in at the 1,300.00 level where a break will turn attention to the 1,290.00 level. Further down, a cut through here will open the door for a move lower towards the 1,280.00 level. Below here if seen could trigger further downside pressure towards the 1,270.00 level. Conversely, resistance resides at the 1,320.00 level where a break will aim at the 1,330.00 level. A turn above there will expose the 1,340.00 level. Further out, resistance stands at the 1,350.00 level.” 

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