After Tuesday's sharp sell-off, Gold attempted a tepid recovery and rose to $1275 level before trimming some of its gains to currently trade around $1271 region.
On Tuesday, the precious metal got slammed to a 3 1/2-month low as stronger greenback, led by a sharp slide in the British Pound and Japanese Yen, was seen weighing heavily on dollar-denominated commodities. Also, reviving hopes of an eventual Fed rate-hike action by the end of 2016, exerted further selling pressure on the non-yielding commodity, gold.
Moreover, the prevalent risk-friendly environment provided little support to the yellow metal's safe-haven appeal and possibilities of big stops getting triggered below $13000 handle might have aggravated the selling pressure, dragging the commodity to its lowest level since the historic Brexit referendum.
A mixed US Dollar performance on Wednesday helped the metal to stage a minor recovery as markets remain focused on this week's key event risk, monthly employment details from the US (NFP), which would help investors to determine the timing of next Fed rate-hike action and eventually trigger the next leg of directional move for the commodity.
Technical outlook
Carol Harmer, Founder at charmertradingacademy.com, notes, "We do need to break and hold above 1275 to take off further downward pressure and if we do not then there will be another wave of selling pressure with 1252/50 then looking to entice...Now this 1252/50 support is from the weekly fib 23.6 level so this is really important for Gold and the trend...we have an intersecting trendline coming in at 1244...and therefore any longs instated to 52/50 should have stops placed below here...If we do beak 1244 then Gold is in trouble for 1211...To ease downward pressure on Gold as Iv said we need to be able to push back above 1275...If we can then the trendline that held us for some many weeks at 1303/04 looking likely to entice."
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