Gold slides back closer to 1-month lows, below $1200 mark ahead of US CPI

Haresh Menghani FXStreet

• A modest USD rebound prompts some fresh selling on Wednesday.
• Bulls seemed little inspired by a fresh wave of global risk-aversion trade.
• The latest US CPI figures and Powell’s speech eyed for fresh directional impetus.

Gold slipped back below the key $1200 psychological mark in the last hour and was seen inching back closer to over one-month lows set in the previous session.

The precious metal failed to capitalize on overnight attempted rebound and met with some fresh supply near the $1205 region, shrugging off a combination of supporting factors. A fresh wave of risk-off trade, as depicted by a negative trading sentiment around equity markets and reinforced by a mildly softer tone around the US Treasury bond yields, did little to boost the precious metal's safe-haven demand.

Meanwhile, firming expectations that the Fed will stick to its gradual monetary policy tightening cycle, even beyond 2018, kept a lid on the non-yielding yellow metal's early uptick. Adding to this, the US Dollar stalled its recent corrective slide from over 16-month lows and has now recovered early lost ground, which was eventually seen as one of the key factors prompting some fresh selling around the dollar-denominated commodity.

Moving ahead, market participants now look forward to the latest US consumer inflation figures for October in order to grab some short-term trading opportunities. This followed by the Fed Chair Jerome Powell's scheduled speech during the early Asian session on Thursday might now play an important role in determining the commodity's next leg of directional move.

Technical levels to watch

A follow-through selling has the potential to continue dragging the metal towards $1188 horizontal level en-route the next major support near the $1182-80 region. On the flip side, the $1205-07 region now seems to have emerged as an immediate strong resistance, above which the recovery could get extended towards the 100-day SMA barrier, currently near the $1214-15 area.

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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