Gold continues to struggle to gain any meaningful traction and meets with a fresh supply near the $1,782 region on Wednesday. The Gold drifts in negative territory for the third successive day and drops to the $1,772 area during the early European session, back closer to over a one-week low touched the previous day.
The U.S. Dollar attracts some dip-buying and stands tall near the monthly peak, which; is a Key factor exerting downward pressure on the dollar-denominated gold. Despite last week’s softer US CPI report, the recent hawkish remarks by Fed officials suggest that the U.S. central bank would stick to its policy tightening path. This; along with a fresh leg up in the U.S.Treasury bond yields, underpins the USD and further contributes to driving flows away from the non-yielding yellow metal.
The downside, however, seems cushioned, at least for the time being, amid the prevalent cautious mood, which tends to benefit the safe-haven gold. The market sentiment remains fragile amid growing worries over a global economic downturn, which were further fueled by the disappointing Chinese data released on Tuesday. Investors also seem reluctant from placing aggressive bets and might prefer to move on the sidelines ahead of the FOMC minutes, due later during the U.S. session this Wednesday.
The markets are currently pricing in a greater chance of at least a 50 bps rate hike at the September FOMC meeting. Hence, the minutes would be looked upon for clues about the possibility of a 75 bps move. This would play a key role in influencing the near-term USD price dynamics and determining the next leg of a directional move for gold. In the meantime, traders are likely to take cues from the U.S. Retail Sales figures for short-term opportunities during the early North American session.
Gold Short (Sell) Enter at: 1766 T.P_1: 1760 T.P_2: 1742.88 T.P_3: 1724.67 T.P_4: 1699.07 T.P_5: 1681.54 S.L: 1795
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