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Gold: gains capped by 5-DMA

FXStreet (Mumbai) - The two-day rally seen in gold appears to lose steam near 5-DMA placed at 1079 levels and the price drifted lower amid positive sentiment on the European stocks.

Gold: Higher lows on daily charts, breakout in sight?

Currently, gold trades marginally higher at 1076.30, moving back and forth in a narrow range. Gold stalls its recovery from Monday’s drop and consolidates amid lack of fresh fundamental triggers in the day ahead. While a turnaround in risk conditions on the back of higher start in the European stocks after the recent sell-off curbed the demand for gold as a safe-haven.

Moreover, broad based US dollar weakness on lower demand amid mixed sentiment in light trading keeps the prices underpinned. The USD index now loses -0.21% to trade at 98.20. Moreover, markets ignored upbeat China CPI data as the main risk event for the bullion remains the Fed decision due next week, with markets expecting the Fed to lift interest rates for the first time in almost a decade.

Gold Technical Levels

The metal has an immediate resistance at 1079 (5-DMA) and 1086.50 (Dec 7 High). Meanwhile, the support stands at 1070.10 (20-DMA), below which doors could open for 1066.72 (1h 200-SMA).

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