Gold struggles to pull away from recent lows

After refreshing its daily low around $1225 area, Gold went into a consolidation phase as we approach the end of the trading day. At the moment the yellow metal is down 0.7% at $1226.

Has the uptrend finally come to an end?

Gold has been on a persistent uptrend since the beginning of the year, correcting losses witnessed after Trump's election victory. However, this trend might finally be degenerating as expectations for a U.S. interest-rate increase as early as March. A report by Reuters highlighted that investors are delaying fresh purchases anticipating a further drop in local prices as the global spot market was pressured by expectations of a hike in interest rates by the U.S. Federal Reserve. On the other hand, geopolitical concerns help the yellow metal limit its losses as a safe-haven for now.

High supply, low demand

According to a report by Chinese official news agency Xinhua, the country is set to increase annual gold output to 500 tons by the end of the decade from around 450 tons currently. Furthermore, growth concerns re-emerged after the Chinese Premier Li said over the weekend that China aims to expand its economy by around 6.5% in 2017, as compared to 6.7% growth seen last year.

Technical outlook

On the 1-hour chart, an inverted cup and handle pattern is seen, suggesting a potential short-term correction towards $1230 (Fib. 50% of the sharp rise on Mar. 3). A break above that level could yield a test of $1237 (Monday high) followed by $1249 (Mar.2 high). On the downside, the first support is aligned at $1225 (Monday low), $1216 (Feb. 15 low) and finally important $1200 (psychological level).