Gold stages a tepid recovery from fresh multi-month lows

Having dropped to fresh multi-month lows during early Asian session, Gold managed to recover the lost ground and has now turned mildly positive amid broad based greenback retracement.

Currently trading around $1287 region, a fresh bout of profit taking slide in the US Dollar is the only factor supporting the precious metal's pull-back from near-term oversold conditions. Weaker greenback usually supports demand for dollar-denominated commodities - like gold, which otherwise might have continued drifting lower amid prevalent risk-on mood, which tends to hurt the yellow metal's safe-haven appeal. 

Further recovery, however, might be restricted given that Wednesday's FOMC meeting minutes reinforced market expectations of tighter Fed monetary policy stance going forward, which might continue to undermine non-yielding precious metal. 

Carol Harmer, Founder at charmertradingacademy.com, notes, "it is looking decidedly unloved and although oversold short term the weekly and especially the monthly charts are not..The monthly charts have actually only just turned negative so the scale of where we could go is quite frightening...."

Meanwhile, in absence of any major market-moving releases from the US possibilities of short-covering cannot be ruled out, which might assist the metal to stage a recovery bounce. Nevertheless, the metal still seems all set to post third consecutive week of declines. 

Technical outlook

Carol Harmer, further adds, "we know there is a mass of resistance at 1199 to 1205...and we look and see what happens there...Can we break 1207...Our first 23.6 Fib level is at 1211 which does coincide with our view that the market trades lower....spookily the 38.2 is at 1235...."

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