Gold Fails to Resist Above 50-DMA, Drops Below $ 1250

Gold Fails to Resist Above 50-DMA, Drops Below $ 1250

24 May 2016, 04:59
Roberto Jacobs
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Gold Fails to Resist Above 50-DMA, Drops Below $ 1250

Gold extends its losing streak into a fifth-day this Tuesday, as persisting calls for a June Fed rate hike weighs down on the non-interest paying investment asset.

Gold surrenders $ 1250 mark

Currently, gold trades -0.10% lower at 1248.10, having posted day’s high at 1252.35 and day’s low at 1245.65. The bullion is seen making a minor recovery attempt from session lows and looks to regain 1250 level, as the underlying risk-off theme in Asia underpins the safe-haven bids for the yellow metal.

However, any effort to the upside is expected to be sold-off into persistent broad USD strength, as markets continue pricing-in a June Fed rate hike, which will make gold unattractive investment asset. A stronger US dollar makes the dollar-denominated gold more expensive for the holders in other currencies.

With yesterday’s disappointing flash manufacturing PMI from the US offering some respite to the bulls, focus now remains on the US new home sales data due later today, ahead of the US durable good and GDP figures scheduled for release in the week ahead.

Gold Technical Levels

The metal has an immediate resistance at 1260 (round figure) and 1264 (10-DMA). Meanwhile, the support stands at 1243.81 (May 19 Low) below which doors could open for 1237.45 (Apr 28 Low).

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