Gold inches back closer to weekly tops

Haresh Menghani FXStreet

• USD slips on tax bill worries and helps regain traction.
• Reviving safe-haven demand provides an additional boost.
• All set to post its first weekly gains in the previous four.

Gold continued gaining some positive traction through the mid-European session and edged back closer to weekly tops touched in the previous session.

After yesterday's brief pause, the commodity resumed with its near-term bullish momentum and extended its recovery move from near 5-month lows touched on Tuesday. A fresh wave of US Dollar selling pressure, amid renewed concerns over the progress of a long-awaited US tax cut bill, helped the dollar-denominated commodity to regain traction on Friday.

Adding to this, the prevalent negative trading sentiment around European equity markets provided an additional boost to the precious metal's safe-haven appeal and collaborated to the up-move.

Currently placed around the $1257 region, the yellow metal has now reversed all of its previous session's corrective slide and remains on track for its first weekly gains in the previous four.

It would now be interesting to see if the up-move is backed by genuine buying or has been solely led by some short-covering amid a goodish pickup in the US Treasury bond yields, which tends to drive flows away from the non-yielding commodity.

Technical levels to watch

Any further up-move now seems to confront immediate resistance near $1261 area, above which the recovery momentum could further get extended back towards the very important 200-day SMA hurdle near the $1268 region.

On the flip side, $1252-50 zone now seems to have emerged as immediate support, which if broken might turn the commodity vulnerable to head back towards testing $1240 strong horizontal support.

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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