Gold – rejected at 5-DMA, surrenders gains

Gold prices failed to hold above 5-DMA level of $1320.74 and fell back to today’s starting point, although the move lacks any clear catalyst other than heightened Dec Fed rate hike expectations.

Caution ahead of Fed rate decision

Fed rate decision is due tomorrow and markets have turned cautious on fears recent batch of strong economic data in the US and record high stock markets amid post Brexit calm may force the Fed to up the ante on rate hike.

December Fed rate hike is back on the table, as per CME data; hence caution appears to have seeped into the yellow metal market ahead of tomorrow’s Fed decision. Nevertheless, uptick in the other traditional safe havens – treasuries and Yen -  is ensuring the losses in the yellow metal are muted.

Gold Technical Levels

Breach of $1314 (rising trend line support on daily chart) could yield $1303 (May 2 high). A violation there would open doors for a test of $1284.41 (Mar 11 high). On the other hand, a break above $1322.44 (daily high) would expose $1327.73 (June 29 high), above which a major hurdle is noted at $1333.69 (July 22 high).