Gold turns higher for the day, up little around $1235 level

Haresh Menghani FXStreet

• Cautious mood underpins safe-haven demand and helps gain positive traction.
• Subdued USD price action, ahead of the US midterm elections, remains supportive.
• Fed rate hike expectations might keep a lid ahead of Thursday’s FOMC decision.

Gold reversed an early dip to sub-$1230 level and is now holding with modest daily gains, recovering the downtick witnessed over the past two trading sessions.

The prevalent cautious mood across global financial markets, ahead of the US midterm elections, turned out to be one of the key factors underpinning the precious metal's safe-haven status.

This, against the backdrop of a subdued US Dollar price action, provided a minor lift and assisted the dollar-denominated commodity to attempt to build on last week's goodish rebound from three-week lows.

The up-move, however, seemed lacking strong conviction/follow-through amid firming expectations for gradual Fed rate hike moves, even beyond 2018, which tends to dampen demand for the non-yielding yellow metal.

Hence, the latest FOMC monetary policy update, scheduled to be announced on Thursday, will now play an important role in determining the commodity's next leg of the directional move.

In the meantime, results of Tuesday's vote might further infuse a bout of volatility across global financial markets and derive safe-haven demand, eventually helping traders to grab some short-term opportunities.

Technical levels to watch

Any subsequent up-move is likely to confront immediate resistance near the $1237 level, above which the metal seems all set to retest multi-month highs, around the $1243-44 region. On the flip side, the $1228-26 region now seems to have emerged as an immediate support, which if broken is likely to accelerate the fall further towards the $1215 support 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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