Gold Review: Stabilizes above $1200 handle amid lackluster trading action

  •  The global flight to safety helps recover early lost ground to sub-$1200 level.
   •  Subdued USD price action remains supportive of the intraday rebound.
   •  Further up-move likely to remain capped ahead of this week’s key data.

Gold reversed an early dip to over one-week lows and is currently placed at fresh session tops, around the $1203 region.

A combination of supporting factors, ranging from a subdued US Dollar price action and the prevalent risk-off mood, helped the precious metal to recover early lost ground to an intraday low level of $1195.68. The USD struggled to build on its early uptick and extended some support to the dollar-denominated commodity. 

Adding to this, a slight deterioration in investors' appetite for riskier assets, as depicted by a negative tone around European equity markets further underpinned the precious metal's safe-haven demand and collaborated to the intraday rebound.

The latest disappointment from the US-Canada trade negotiations was seen as a bad sign for the ongoing US-China trade spat. Given that the US President Donald Trump is ready to impose tariffs on an additional $200 billion worth of Chinese imports, the development continued weighing on market sentiment at the start of a new trading week. 

Further gains, however, remained limited as traders seemed reluctant to place any aggressive bets amid holiday-thinned liquidity conditions and ahead of this week's important US macro releases, including the keenly watched non-farm payrolls data.

Technical Analysis

The commodity, over the past one week or so, has been oscillating within a downward sloping trend-channel formation on the 1-hourly chart, suggesting near-term negative bias. Bulls, however, have been showing resilience below the key $1200 psychological mark. Hence, it would be prudent to wait for a convincing break through the mentioned support before positioning for any further near-term downfall. 

On the upside, sustained move beyond the trend-channel hurdle, currently near the $1206 region, would invalidate the bearish outlook and trigger a short-covering bounce back towards $1214 intermediate resistance en-route the $1217-18 supply zone.

 

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