Gold holds weaker below $1285 level amid a modest USD rebound
• A goodish pickup in the US bond yields revive USD demand and prompt some selling.
• The prevalent risk-on mood further dents the commodity’s relative safe-haven status.
• Focus shifts to Wednesday’s latest FOMC meeting minutes/Powell’s speech on Thursday.
Gold extended the overnight retracement slide from the $1295 horizontal zone and remained under some selling pressure through the early European trading session.
After falling for four straight sessions to the lowest level since mid-Oct., a modest US Dollar rebound was seen exerting some fresh downward pressure on the dollar-denominated commodity.
A follow-through pickup in US Treasury bond yields remained supportive of the USD uptick and further collaborated towards driving flows away from the non-yielding yellow-metal.
Meanwhile, continuous improvement in the risk-sentiment, amid optimism over a possible US-China trade deal and reinforced by a positive mood across global equity markets, further dented the precious metal's safe-haven status.
It, however, remains to be seen if the current pull-back marks the end of the recent upsurge or is seen as a buying opportunity amid expectations that the Fed might slow the pace or perhaps even pause the tightening cycle in 2019.
Hence, the key focus will remain on Wednesday's release of the latest FOMC meeting minutes, which followed by the Fed Chair Jerome Powell's scheduled speech a day after should provide a fresh directional impetus.
Technical levels to watch
The $1280 horizontal level is likely to protect the immediate downside, below which the commodity is likely to accelerate the fall towards the $1269-68 region en-route $1260 support. On the flip side, any meaningful up-move beyond $1285 area now seems to confront some fresh supply near the $1290 region, which is closely followed by a strong resistance near the $1295 horizontal zone.