• Gains strong traction on heavy USD supply. • Comments by Chinese officials weigh heavily on the USD. • Reviving safe-haven demand lends additional support.
After an initial dip to one-week lows, gold gained some fresh traction and spiked to near 4-month tops in the past hour.
The precious metal touched an intraday high level of $1327.74, tracking broad-based US Dollar sell-off following a report that Chinese officials have recommended slowing or halting purchases of US Treasuries.
• China officials said to recommend slowing or halting Treasury buying
The news triggered a kneejerk reaction in the fixed income market and also hit global equity markets, which provided an additional boost to the yellow metal's safe-haven appeal.
The USD selling pressure seems to have receded, at least for the time being and was now seen keeping a lid on any additional gains for dollar-denominated commodities - like gold.
Currently trading around $$1324 level, traders now look forward to the US economic docket, featuring the second-tier releases of import prices and the final wholesale inventories data, for some short-term momentum play.
Technical levels to watch
A follow-through buying interest has the potential to lift the commodity towards $1332-33 supply zone, above which the momentum is likely to get extended towards $1340 ahead of the $1349-50 region.
On the downside, $1320 level now seems to protect the immediate downside, which if broken could drag the metal back towards $1312 horizontal level en-route $1308 strong support.
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