Gold stays firm near session tops, above $1250

Haresh Menghani FXStreet

Gold maintained its positive bias for the second consecutive session and is currently placed closer to the top end of daily trading range, around $1252-53 region.

A delay of the highly-anticipated US healthcare bill vote raised skepticism over the US President Donald Trump's ability to deliver on his promises of tax reform and pro-growth fiscal policies and triggered a sharp overnight sell-off in the US equity markets. The spill-over effect, as depicted by selling pressure around European equity markets, remained supportive for the precious metal's safe-haven appeal.

• US: Warning signs of a recession? - Natixis

Market concerns also weighed heavily on the greenback, with the key US Dollar Index slumping to fresh yearly lows and provided an additional boost to dollar-denominated commodities - like gold.

Meanwhile, the Fed Chair Janet Yellen reaffirmed that the central bank would continue to gradually raise interest rates and the same is evident from the ongoing upsurge in the US Treasury bond yields, which is eventually capping further up-move for the non-yielding metal.

Hence, it would be prudent to wait for a strong follow through buying interest before confirming that the metal could have bottomed out in the near-term.

Later during the NA session, the release of pending home sales data might provide some short-term trading impetus. However, key focus would be on central bankers’ comments coming out of a panel discussion at the European Central Bank Forum.

Technical levels to watch

Immediate resistance is pegged near $1256-57 region, above which a fresh bout of short-covering has the potential to continue boosting the metal even beyond $1260 resistance towards its next hurdle near $1265-67 area.

On the downside, weakness back below $1248 immediate support could drag the commodity back towards $1242 support, which if broken could extend the downslide back towards multi-week lows support near $1235 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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