Gold retreats farther below $1200 mark

Haresh Menghani FXStreet

• FOMC minutes reaffirmed Sept. rate hike prospects and capped the recent recovery move.
• Resurgent USD demand amid fresh US-China trade spat prompts aggressive selling on Thursday.

Gold extended overnight retracement slide from over one-week tops and remained under some selling pressure through the early European session.

The precious metal's recent recovery move from over 19-month lows ended on Wednesday, with bulls failing to sustain early move beyond the closely watched $1200 psychological mark.

Minutes from the Federal Reserve’s August meeting reaffirmed prospects for a September rate hike and was seen as one of the key factors keeping a lid on any further up-move for the non-yielding yellow metal.

Adding to this, resurgent US Dollar demand, further supported by intensifying US-China trade disputes, exerted some additional downward pressure and dragged the dollar-denominated commodity back below $1190 level.

Meanwhile, the prevalent cautious mood across global financial markets did little to support the precious metal's safe-haven appeal, with the USD price dynamics turning out to be an exclusive driver of the ongoing downfall.

Today's slide could further be attributed to some technical selling below a short-term ascending trend-line support, suggesting that the near-term corrective rally might have already run out of steam. Hence, a follow-through weakness, indicating the resumption of the well-established bearish trend, now looks a distinct possibility.

Technical levels to watch

Immediate support is pegged near $1185 level, below which the commodity is likely to accelerate the slide towards $1180 support area en-route the $1173-72 region. On the flip side, momentum back above $1190 level could get extended towards $1196 intermediate resistance before the metal makes a fresh attempt towards reclaiming $1200 round figure mark.

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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