• Cautious mood underpins safe-haven demand and helps gain positive traction. • Subdued USD price action, ahead of the US midterm elections, remains supportive. • Fed rate hike expectations might keep a lid ahead of Thursday’s FOMC decision.
Gold reversed an early dip to sub-$1230 level and is now holding with modest daily gains, recovering the downtick witnessed over the past two trading sessions.
The prevalent cautious mood across global financial markets, ahead of the US midterm elections, turned out to be one of the key factors underpinning the precious metal's safe-haven status.
This, against the backdrop of a subdued US Dollar price action, provided a minor lift and assisted the dollar-denominated commodity to attempt to build on last week's goodish rebound from three-week lows.
The up-move, however, seemed lacking strong conviction/follow-through amid firming expectations for gradual Fed rate hike moves, even beyond 2018, which tends to dampen demand for the non-yielding yellow metal.
Hence, the latest FOMC monetary policy update, scheduled to be announced on Thursday, will now play an important role in determining the commodity's next leg of the directional move.
In the meantime, results of Tuesday's vote might further infuse a bout of volatility across global financial markets and derive safe-haven demand, eventually helping traders to grab some short-term opportunities.
Technical levels to watch
Any subsequent up-move is likely to confront immediate resistance near the $1237 level, above which the metal seems all set to retest multi-month highs, around the $1243-44 region. On the flip side, the $1228-26 region now seems to have emerged as an immediate support, which if broken is likely to accelerate the fall further towards the $1215 support region.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.