Gold Holding Steady Below $1250
On Wednesday, Gold
prices moved higher for third consecutive day as Tuesday weak US
economic data reassured investors that the Fed is likely to move slowly
in raising interest rates.
Gold prices advanced over $8 to $1,251/ounce but retraced a bit to currently trade at $1248 ahead of the Fed announcement later during the day. Since the Fed is not expected to hike interest rates, USD has been trading on the back-foot and a weaker USD tends to boost demand for the yellow metal. It should, however, be noted that should the Fed offer clues of a rate-hike in June, a stronger USD could have opposite effect on gold prices.
Technical levels to watch
The metal is extending its rebound from 61.8% Fibonacci retracement level of $1207-$1270 up-swing and has now trading well above 38.2% Fibonacci retracement level. This 38.2% Fibonacci retracement level near $1246-45 area seems to extend immediate support. Failure to hold this immediate support could drag the precious metal back towards $1240-39 support area marked by 50% Fibonacci retracement level.
On the upside, strengthening momentum above $1250 psychological mark resistance seems to boost the metal immediately towards $1256-58 resistance area before attempting a fresh up-move back towards April high resistance near $1270 level.