Gold struggles despite softer USD

6 June, 2018

Fails to benefit from the ongoing USD retracement slide and escalating trade tensions. Fading safe-haven demand/rising US bond yields/ECB QE exit talks seemed capping gains.

Gold struggled to build on overnight goodish rebound and remained capped below the $1300 handle through the early European session on Wednesday. 

Despite the ongoing US Dollar retracement, which tends to benefit dollar-denominated commodities - like gold, weakening demand for traditional safe-haven assets, amid improving risk appetite in global financial markets, was seen keeping a lid on any meaningful up-move.

Adding to this, a goodish pickup in the US Treasury bond yields, coupled with the latest ECB QE exit talks further collaborated towards driving flows away from the non-yielding yellow metal, albeit escalating global trade war fears helped limit deeper losses, at least for the time being. 

Looking at the broader picture, the commodity has been oscillating within a broader trading range over the past three weeks or so. Moreover, attempted recovery moves were being sold into near the very important 200-day SMA, clearly suggesting that the near-term selling pressure might still be far from over. 

Immediate support is pegged near the $1293-92 region, below which the commodity seems to head back towards $1288-87 horizontal support before eventually dropping to yearly lows support near the $1282 level.

On the upside, momentum beyond the $1300 handle might continue to confront stiff resistance near the $1307-08 region (200-DMA), which if cleared might trigger a short-covering bounce towards $1315 hurdle.

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