Gold retreats from 3-day high, stronger USD caps recovery

Having touched a three-day high level of $1221, Gold retreated from session peak amid renewed greenback buying interest.

Currently trading around $1216-15 area, the precious metal was seen building on previous day's rebound momentum from Friday's 9-month low as the US Dollar paused its post-US presidential election relentless rally to the highest level since April 2003. However, renewed greenback buying interest, on continued expectations for Fed rate-hike action in December and prospect of aggressive fiscal stimulus by Trump administration, the yellow metal lost its recovery momentum and trimmed some of its gains, albeit traded in positive territory for the second straight session. With a high degree of negative correlation, stronger greenback tends to weigh on dollar-denominated commodities - like gold. 

Moreover, the prevalent positive sentiment around equity markets is further denting the metal's safe-haven demand and has failed to extend support to the metal's up-move on Tuesday. 

With a relatively thin US economic docket, featuring the release of US existing home sales data, investors will remain focused on Wednesday's release of US monthly durable goods order and FOMC meeting minutes ahead of next week's NFP data, which would help to determine near-term trajectory for gold prices. 

Technical levels to watch

Weakness below session low support near $1213 level is likely to get extended towards $1208 horizontal support, which if broken might now drag the commodity further towards $1200 psychological mark support. On the upside, strength above $1220-21 resistance (session peak) has the potential to lift the metal further towards recent recovery highs resistance near $1229-30 region.

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