Gold slides further into negative territory, up next US ADP report

Expected OPEC output deal-led optimism is weighing heavily on traditional safe-haven assets, with Gold dropping to fresh session low ahead of US ADP report. 

Currently trading around $1185 region, spot accelerated downslide from session peak level near $1195 amid resurgent greenback strength, which tend to dent demand for dollar-denominated commodities - like gold. Moreover, the prevalent risk-on mood, as depicted by buoyant sentiment around equity markets led by optimism over OPEC deal, is further driving flows away from safe-haven assets and is weighing on the yellow metal.

Meanwhile, with December Fed rate-hike move fully priced-in, upbeat incoming US economic data would further fuel expectations of faster-than-expected Fed rate-hike actions in 2017 and is exerting additional selling pressure around the non-yielding metal.

Hence, investors on Wednesday will remain focused on US macro releases, especially on ADP report on private sector employment, which is seen as a precursor to the official jobs report (NFP), scheduled for release on Friday. Upbeat private sector employment details would reinforce the underlying strength in the US labor market and might continue dragging the commodity, even from current depressed levels.

Pointing to the near-term bearish technical set-up, Carol Harmer, Founder at charmertradingacademy.com, notes, " We have tried twice now to break the 1199 resistance...and have failed with the recent highs being 1197...Now this coupled with the bearish looking weekly charts does not show an overall good picture for Gold..."

Technical levels to watch

Carol Harmer further writes, "Now we have hit resistance area twice and failed...so if we try again there may well be enough scope to take out this resistance and push higher to 1205 and possibly even the 1235 area...Failure again at 1199 sees 1171/70..."