Gold struggling for direction, confined in a narrow range

Haresh Menghani FXStreet

Gold oscillated within a narrow trading range, and struggled for a firm direction amid lackluster trading action on Thursday.

A slight improvement in sentiment around riskier assets, as depicted by a mildly positive bias in European equity markets, dented the precious metal's safe-haven appeal.

Meanwhile, a softer tone surrounding the greenback, with the key US Dollar struggling to build on overnight recovery gains and hanging close to multi-week lows was seen lending some support. A weaker dollar tends to boost demand for dollar-denominated commodities - like gold.

Also limiting the downslide has been nervousness ahead of the crucial French Presidential election, where an upset could trigger a fresh bout of volatility across global financial markets and drive investors back towards traditional safe-haven assets, including gold.

The combination of diverging forces has led to a subdued, range-bounce price-action on Thursday. The US economic docket would now be looked upon for some fresh impetus, while comments by the US Treasury Secretary Steven Mnuchin might also influence investors’ sentiment and drive the metal later during the day.

Technical levels to watch

Currently trading around $1279-80 region, immediate support is pegged near $1273 level (yesterday's low), below which the commodity is likely to break below $1270 support and head towards testing $1262-61 support area ahead of the very important 200-day SMA near $1255 region.

On the upside, $1284 level now seems to act as immediate hurdle, which is followed by resistance near $1289 area. A follow through strength beyond the said resistance levels now seems to lift the metal beyond multi-month highs resistance near $1295 level towards testing $1300 psychological 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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