• Resurgent USD demand prompts some fresh selling during the early NA session. • Weaker opening in the US equity markets/retracing US bond yields help limit downside. • Investors await FOMC announcement before positioning for near-term direction.
Gold finally broke down of its European session consolidation phase and has now surrendered a major part of its early goodish recovery gains.
A sudden pickup in the US Dollar demand, in what could be termed as a late reaction to slightly better-than-expected ADP report, prompted some fresh selling around dollar-denominated commodities - like gold.
Further downside, however, remained cushioned by a weaker trading sentiment around the US equity markets, which was seen lending support to the precious metal's safe-haven appeal.
This coupled with a sharp retracement in the US Treasury bond yields further underpinned demand for the non-yielding yellow metal and might continue to help limit deeper losses ahead of the much awaited FOMC announcement.
The Fed is widely expected to leave interest rates on hold but investors would be looking for clues about the future tightening path, which would eventually help investors determine the commodity's next leg of directional move.
Technical levels to watch
A follow-through weakness below $1302 region (Tuesday's low) now seems to pave the way for an extension of the metal's downfall towards $1294-93 horizontal support. On the upside, $1310-12 area might continue to act as an immediate hurdle, above which the commodity is likely to challenge $1315-16 intermediate resistance before eventually darting towards $1323-25 supply zone.
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