Gold hovering around 3-week high

August 3, 2016

Gold on Wednesday traded in a narrow band but maintained its bid tone and is hovering around 3-week high level touched on Tuesday to currently trade around $1364 region.

The US Dollar remained under intense selling pressure on Tuesday and extended support to dollar-denominated commodities - like gold. Adding to this, weaker equity markets boosted appeal for safe-haven assets, providing additional momentum to buoyant gold prices. 

On Wednesday, weaker Chinese services PMI data dented investor risk-appetite and helped the yellow metal to hold on to its recent gains. 

Going forward, ISM non-manufacturing PMI and ADP report on private sector employment details from the US would provide fresh impetus for the precious metal. In the meantime, prevalent risk sentiment would continue to drive the metal during European trading session.

Technical levels to watch

On the immediate upside, post-Brexit swing high near $1370-72 remains immediate hurdle to clear, above which the commodity seems all set to extend its bullish momentum towards reclaiming $1400 handle for the first time since Sept. 2013.

Conversely, any corrective move now seems to find immediate support near $1355-50 region, which is followed by 20-day SMA strong support near $1340-38 region. Sustained weakness back below 20-day SMA might negate possibilities of any further up-move and make it vulnerable to resume its near-term corrective move.

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