Gold Review: Flirts with an important horizontal support, near $1218 level

Haresh Menghani FXStreet

• Fails to attract any buying interest despite a subdued USD price action.
• Cautious mood/weaker US bond yields do little to lend any support.

Gold traded with a negative bias for the fourth consecutive session and has now moved on the verge of breaking below an important horizontal support near the $1218 region.

Despite a subdued US Dollar demand, which tends to underpin dollar-denominated commodities the precious metal failed to attract any buying interest and remains within striking distance of YTD lows, set earlier this month.

Even the prevalent cautious mood around European equity markets, further reinforced by a weaker tone around the US Treasury bond yields also did little to lend any support to the precious metal's safe-haven appeal.

Meanwhile, firming expectations that the Fed will stick to its plan to continue raising interest rates through the end of this year turned out to be one of the key factors exerting downward pressure on the non-yielding commodity.

Hence, the key focus would remain on the latest FOMC monetary policy update on Wednesday, which along with the keenly watched US monthly jobs report (NFP) should help investors determine the commodity's next leg of directional move.

Technical Analysis

From a technical perspective, a convincing break below the $1218 horizontal support would confirm a bearish double-top chart pattern formation on the 1-hourly chart and pave the way for an extension of the near-term downward trajectory, back towards challenging YTD lows, around the $1212-11 region.

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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