Gold headed back to last week’s 10-month lows

After failing to benefit from Italian referendum-led risk-off mood, Gold came under renewed selling pressure and was seen heading back to nearly 10-month low touched last week.

Currently trading around $1166, renewed risk-on mood, led by receding fears from Italian uncertainty and as depicted by the prevalent upbeat sentiment surrounding European equity markets, is weighing heavily on the precious metal's safe-haven appeal.

Moreover, the greenback's near-term consolidative phase, closer to multi-year highs, offered little help to dollar-denominated commodities - like gold. Meanwhile, expectation of higher US interest-rates, even beyond December meeting, is further weighing on the non-yielding yellow metal. Hence, the upcoming FOMC meeting on December 13-14 would be looked upon for fresh clues over the Fed's monetary policy outlook for 2017 and eventually holds the key for the metal's next leg of directional move. 

In the meantime, today's release of US ISM non-manufacturing PMI for November, which is expected to inch higher and come-in at 55.3 from previous month's 54.8, might assist traders to grab some short-term trading opportunities.

Technical levels to watch

Immediate downside support is pegged near $1160 region (Dec. 1 low) below which a fresh leg of weakness is likely to drag the commodity further towards its next support near $1151-50 area. On the upside, any recovery attempt might now confront immediate resistance near $1176 level, which if cleared has the potential to lift the metal back towards session peak resistance near $1187 level.