Gold under pressure for second straight session, slips below $1200 mark

Haresh Menghani FXStreet

Gold remained under some selling pressure for the second straight session on Thursday and is currently flirting with $1200 psychological mark.

On Wednesday, the Fed Chair Janet Yellen said that the central bank would gradually raise interest rates. This coupled with upbeat US CPI print reinforced expectations of steeper Fed rate-tightening cycle, driving the US treasury bond yields higher across the board and eventually denting demand for the non-yielding yellow metal.

Reviving hopes of additional Fed rate-hike actions in 2017 also extended support to the US Dollar's recovery trend and also drove flows away from dollar-denominated commodities - like gold.

Investors now look forward to Trump's inauguration on Friday, which would be looked upon for more clarity on his fiscal policies and would enable investors to determine a pronounced medium-term direction for the commodity.

Technical levels to watch

A follow through retracement below $1195 immediate support is likely to accelerate the slide towards 50-day SMA important support near $1180 region, with some intermediate support near $1191-90 area.

On the upside, $1203-05 region now becomes immediate resistance above which the commodity is likely to aim back towards nearly two-month high resistance near $1217-18 region. A convincing move above multi-month high would pave way for continuation of the metal's near-term recovery trend further towards its next resistance near $1230 level.

1. R3 1230.18
2. R2 1223.97
3. R1 1213.93
PP 1207.72
1. S1 1197.68
2. S2 1191.47
3. S3 1181.43

Author

Haresh Menghani

FXStreet

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

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.