Gold reverses tepid recovery gains

Gold failed to build on Wednesday' tepid recovery move and has now drifted into negative territory, reversing early minor gains to $1178.50 region, ahead of key monetary policy decisions from two of the most influential central banks, ECB on Thursday and FOMC next week. 

Currently trading around $1174 region, testing session lows, the precious metal intially benefitting from a mild US Dollar retracement as investors seemed to adjust their positions ahead of next week's Fed meeting. A weaker greenback tends to boost demand for dollar-denominated commodities - like gold.

The metal's mild recovery momentum, however, lacked conviction as market remain convinced that the Fed would certainly raise interest-rates at next week's meeting and would opt for steeper rate-tightening path in the near-future. Hence, focus would be on the accompanying Fed rate-statement, where markets will look for updated projections, especially 'dot plots' in order to evaluate possibilities and timing of next Fed rate-hike action. CME group's FedWatch Tool is currently pointing to 50% probability of another Fed rate-hike move in June and should the central bank outlook reinforce market expectations, it is likely to attract fresh selling pressure around the non-yielding yellow metal. 

In the meantime, ECB monetary policy decision-led volatility in financial markets would derive the metal's safe-haven demand and eventually provide some impetus on Thursday. 

Technical levels to watch

Immediate downside support is pegged at $1170 region, which if broken decisively is likely to drag the metal back towards $1160 strong support. A sustained weakness below $1160 support is likely to turn the commodity vulnerable to break through 10-month lows support near $1157 level and head towards testing its next major support near $1152-50 region. 

On the upside, $1178-80 region seems to have emerged as immediate resistance above which the metal is likely to extend the recovery trend immediately towards weekly high resistance near $1188 region before aiming towards its next major hurdle near $1195-97 region.