Gold weakens to $1315 level, hangs closer to 5-week lows

Haresh Menghani FXStreet

• Risk-off mood fails to assist build on previous session’s rebound.
• Fed rate hike expectations now seemed to cap any meaningful gains.

Gold struggled to build on overnight rebound from near 5-week lows and has now retreated to the lower end of its daily trading range.

Despite a modest weakness to $1315 level, the precious metal struggled for a firm direction and seesawed between tepid gains/minor losses through the Asian session. A combination of diverging forces failed to provide any fresh impetus and has led to a range-bound/subdued price-action on the last trading day of the week.

A fresh wave of selloff across global equity markets was seen underpinned the commodity's safe-haven appeal. The positive factor was largely negated by firming Fed rate hike expectations, which tends to drive flow away from the non-yielding yellow metal.

Meanwhile, the recent sharp US dollar recovery has been exerting downward pressure on dollar-denominated commodities - like gold since last Friday, with spot prices now trading down more than 1% for the week and remain on track for the second straight weekly loss.

Technical levels to watch

A follow-through selling pressure has the potential to drag the commodity back towards $1308 horizontal support before the fall extends further towards the key $1300 psychological mark.

On the upside, $1322 area now seems to have emerged as an immediate resistance, above which a fresh bout of short-covering could lift the metal beyond $1327-28 intermediate resistance towards its next hurdle near the $1333-35 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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