Gold off lows, still holding in red for second straight session

Gold extended its profit taking slide from fresh monthly tops touched in the previous session and traded with negative bias for the second consecutive session.

On the last trading day of the week, the precious metal dropped to touch a 3-day low level of $1242 in wake of a goodish greenback recovery. In fact, the key US Dollar Index was seen pulling away from multi-week lows touched this week and is weighing on dollar-denominated commodities - like gold. 

The ongoing up-move in the US treasury bond yields is supportive of the greenback's recovery move and is also collaborating towards driving flows away from the non-yielding yellow metal. This coupled with improving investors' risk appetite, as depicted by positive sentiment in equity markets, further dented the metal's safe-haven appeal and prompted traders to take some profits off the table following its post-FOMC up-surge from $1222 to three-week highs beyond $1250 level. 

Despite of the mildly weaker trading sentiment surrounding the metal, the downslide has been limited amid growing uncertainty over Trump's healthcare bill, especially after postponement of the vote that raised skepticism about the Trump administration’s ability to deliver on promised tax cuts and infrastructure spending.

Later during the day, speech from Chicago Fed President Charles Evans would now be looked upon for fresh impetus ahead of the US economic docket, featuring the release of durable goods orders for the month of February. 

Technical levels to watch

Carol Harmer, Founder at charmertradingacademy.com writes, "technical indicators on the dailies have turned negative...first time since the rise from 1122 so please be very careful of taking long positions...I would think that we can come lower and a move back to 1237/36..Now as Iv said 1236 is good support....we break below here we have support once more at 1226...Now...if we fail to hold over 1226 look for 1216 as a viable target...Below here look for 1204..."

"Now we really do have a raft of resistance and higher levels...we have the daily 61.8 coming in at 1254...the 200 day M/A at 1259 and chart resistance from previous highs at 1261 and 1263...." she added.