Gold extends recovery from last week's multi-month low
Gold extended its recovery for the second consecutive session from last week's 10-1/2 month lows, touched in the aftermath of hawkish Fed interest rate forecasts.
Currently trading around $1140 region, spot gained some respite amid broad based greenback retracement after logging sixth consecutive weekly loss. The overall US Dollar Index witnessing some profit taking slide from a 14-year peak and boosting demand for dollar-denominated commodities - like gold.
Being highly sensitive to the US interest-rates, increasing prospects of faster Fed rate-tightening cycle in 2017 might continue to weigh on the non-yielding yellow metal and restrict any swift recovery. Adding to the bearish fundamentals, a further cut in the Hedge fund and money managers' net long position for the fifth straight week might also contribute towards capping any near-term recovery for the precious metal.
Technical levels to watch
A follow through buying interest is likely to lift the commodity further towards $1150 level above which a fresh bout of short-covering rally should boost it to $1158-60 horizontal resistance. On the downside, renewed weakness below $1130, leading to a subsequent break below multi-month low support near $1122 level, is likely to accelerate the fall towards $1110 before the commodity eventually drops to test $1100 psychological mark.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
