• Fed rate hike expectations keep a lid on any attempted recovery.
• A modest USD rebound exerts some fresh downward pressure.
• Broader trading range holds ahead of Friday’s US inflation figures.
Gold continued with its struggle to register any meaningful recovery and remains within striking distance of over 17-month lows, set last Friday.
The precious metal continued with its range-bound price action within a broader trading range, held over the past one-week or so. Expectations about gradual Fed rate hike path had been one of the key factors keeping a lid on any attempted recovery move for the non-yielding yellow.
Meanwhile, an early uptick to the $1216 area was quickly sold into and was being weighed down by a goodish US Dollar rebound, which tends to undermine demand for dollar-denominated commodities - like gold. The recent USD profit-taking slide stalled on Wednesday and found some support following China's Foreign Ministry about the US sanctions on Iran.
China's Foreign Ministry said that it opposes unilateral US sanctions on Iran and prompted some safe-haven flows, which coupled with a negative trading sentiment around European equity markets seemed to be the only factor extending some support and helping limit deeper losses, at least of the time being.
In absence of any major market moving US economic releases, the commodity seems more likely to continue with its subdued price action. Investors now look forward to this week's important US macro data - July consumer inflation figures, which might influence Fed rate hike expectations and eventually provide some fresh directional impetus.
Technical levels to watch
Any meaningful up-move is likely to confront resistance near $1220-22 zone, above which the commodity is likely to aim towards challenging its next major hurdle near the $1331 region. On the flip side, $1207-06 area might continue to protect the immediate downside, which if broken should open the room for an extension of the metal's well-established bearish trend.
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