Gold hanging near 3-week lows

2 May, 2017

Gold oscillated in a narrow trading band, with slight negative bias, and was seen consolidating previous session's break down to 3-week lows. 

Currently hovering around $1255 region, the precious metal has now moved on the brink of breaking below the very important 200-day SMA and has been pressured by improving investors’ appetite for riskier assets - like equities. With the US government averting a shutdown, receding geopolitical tensions has been dampening demand for traditional safe-haven assets - like gold. 

Adding to this, growing bets for additional Fed rate-hike moves in 2017, despite of recent disappointment from the US economic docket, is further weighing on the non-yielding metal. 

On Tuesday, subdued US Dollar price-action was seen lending some support to the dollar-denominated commodities and has helped the commodity to hold just above the very important 200-day SMA support, at least for the time being.

In absence of any major market moving economic releases, broader market risk-sentiment and the greenback dynamics would remain key determinants of the metal's movement on Tuesday. However, given the proximity of this week's important event risks - FOMC meeting and the keenly watched US monthly jobs report (NFP), repositioning trade is likely to be a dominant theme and might lead to some volatile price action later during the day.

Technical levels to watch

On a sustained break below 200-day SMA support near $1252-50 region, the metal is likely to accelerate the slide towards $1245-44 horizontal support ahead of its next support near $1240 level. On the upside, any recovery attempts beyond $1260 level now seems to confront strong resistance near $1265-67 zone and only a decisive break through this important hurdle might negate any near-term bearish bias for the commodity.

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