Gold hangs near 1-week lows ahead of FOMC

   •  A follow-through USD buying/Fed rate hike expectations kept exerting downward pressure.
   •  The prevalent cautious mood underpins safe-haven demand and helped limit deeper losses.
   •  Investors now eye the latest FOMC monetary policy update for a fresh directional impetus.

Gold continued with its steady intraday decline and refreshed one-week lows, around the $1220 region, in the last hour, albeit quickly rebounded thereafter.

The US Dollar recovered further from the 2-1/2 week lows touched on Wednesday, in the aftermath of the US midterm elections results, and was seen as one of the key factors dampening demand for the dollar-denominated commodity.

With the US elections producing no major surprises, market participants now seemed convinced that the Fed will stick to its gradual monetary policy tightening cycle and further collaborated towards driving flows away from the non-yielding yellow metal.

Meanwhile, the prevalent cautious mood around equity markets did little to revive the precious metal's safe-haven demand, albeit seemed to be the only factor helping limit deeper losses ahead of today's key event risk - the latest FOMC monetary policy update. 

The Fed is not expected to raise interest rates on Thursday and hence, the key focus will be on fresh clues about a possible rate hike in December and in 2019, which might eventually help determine the commodity's next leg of the directional move.

Technical levels to watch

Immediate support is pegged near the $1217-16 region (100-day SMA), below which the commodity is likely to accelerate the downfall towards recent swing low level of $1212 en-route $1207 horizontal zone. On the flip side, the $1226-27 region now seems to act as an immediate resistance, which if cleared might prompt a short-covering bounce back towards the $1233-35 supply zone.