• The positive mood around equity markets denting the commodity’s safe-haven status.
• Traders opt to lighten their bullish bets despite the prevalent USD selling bias.
• All eyes remain glued to the highly anticipated FOMC decision and updated projections.
After an initial uptick to fresh multi-month tops, gold started drifting lower and eroded a major part of the previous session's modest gains.
The precious metal stalled this week's goodish up-move ahead of the very important 200-day SMA resistance and for now, seems to have snapped two consecutive days of winning streak.
The prevalent positive mood across equity markets dented demand for traditional safe-haven assets and turned out to be the only factors exerting some downward pressure around the precious metal.
Bullish traders seemed unaffected by the prevalent US Dollar selling bias, which tends to underpin demand for the dollar-denominated commodity, rather preferred to lighten their bets ahead of today's key event risk.
Defensive positioning going into the FOMC decision clearly suggest that investors awaited fresh cues over the central bank's rate hike path that will influence the opportunity cost of holding the non-yielding yellow-metal.
Though odds remain skewed to the upside, it would be prudent to wait for a convincing breakthrough the mentioned hurdle before positioning for any further near-term appreciating move.
Technical levels to watch
On a sustained move beyond the $1253 region (200-DMA), the commodity is likely to dart towards $1265 supply zone with some intermediate resistance near the $1260 region. On the flip side, $1245 level is likely to act as immediate support, which if broken is likely to accelerate the fall towards $1236-35 support area.
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