Gold building on overnight strong gains, hits fresh weekly highs

Gold was seen building on overnight strong gains and surged to a fresh weekly high level of $1228.

Spot prices extended previous session's sharp up-move as the Fed sounded less hawkish, with officials sticking to their outlook for two more rate hikes in 2017. In absence of signals for faster rate-tightening, Wednesday's Fed decision triggered a broad based US Dollar sell-off. In fact, the key US Dollar Index has now dropped to one month low and is supportive of the strong bid tone surrounding dollar-denominated commodities - like gold. 

Meanwhile, a status quo BoJ monetary policy stance did little to hinder the commodity's strong move to the highest level since March 6. Traders even shrugged off a fresh wave of risk-on trade across global financial markets, which tend to dent the yellow metal's safe-haven demand, with the USD price dynamics being an exclusive drive of the commodity's move on Thursday.

Focus now shifts to the BoE monetary policy decision, which although is unlikely to directly influence the movement but might infuse fresh volatility in the markets and derive demand for traditional safe-haven assets, including gold. 

Technical outlook

Carol Harmer, Founder at charmertradingacademy.com notes, "1216/1212 is support and we buy here....we add to 1204 and we stop out at 1192....take out 1228 for 1236 to 1244...don't forget we still have 1263 where we topped before..."

"All we have done is switched the range....we have 1212/10 now as excellent support and if you want to keep stops tight place them below 1209....."