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Gold surrenders early gains, weighed down by a modest USD rebound

   •  Mostly positive US data provides a minor lift to the USD and prompts fresh selling.
   •  Rising bond yields offset cautious mood and add to the downward pressure.

Gold once again failed ahead of the very important 200-day SMA and quickly surrendered early gains during the early North-American session.

The latest leg of sharp fall over the past hour or so could be solely attributed to a goodish US Dollar rebound, led by mostly positive US economic data, which prompted some fresh selling around dollar-denominated commodities - like gold. 

Adding to this, a mildly positive tone around US Treasury bond yields exerted some additional downward pressure on the non-yielding yellow metal and further collaborated to its retracement back to the $1300 handle, or fresh session lows.

Meanwhile, traders seemed to have largely shrugged off the prevalent cautious mood around equity markets, with receding anxiety over the political situation in Italy doing little to revive the commodity's safe-haven appeal. 

Moving ahead, the market focus now shifts to comments by influential FOMC member - Atlanta Fed President Raphael Bostic and the Fed Governor Lael Brainard, which if provides some fresh clues over the central bank's near-term monetary policy outlook might produce some meaningful trading opportunities. 

Technical levels to watch

A follow-through retracement below $1296-95 immediate support, leading to a subsequent drop below $1293 horizontal level now seems to accelerate the fall back towards $1288-87 support area. On the flip side, the $1306-08 region (200-DMA) might continue to act as an immediate strong hurdle, which if cleared decisively might trigger a short-covering rally towards $1314 intermediate resistance en-route $1321-22 supply zone.
 

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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