Gold consolidated near $1310 area, FOMC awaited

London (May 2)  Gold held on to its recovery gains and now seems to have entered a bullish consolidation phase, within a narrow trading range near the $1310 region.

A modest US Dollar profit taking slide extended some support to the dollar-denominated commodity and helped staged a goodish rebound from the very important 200-day SMA neighborhood.

Further gains, however, remained capped amid strong bullish sentiment around European equity markets, which was seen weighing on the precious metal's safe-haven appeal.

Adding to this, a follow-through uptick in the US Treasury bond yields, supported by rising speculations over a steeper Fed monetary policy tightening cycle, further collaborated towards keeping a lid on the recovery move.

Hence, investors' focus would remain glued to the highly anticipated FOMC decision, which would be looked upon for clues over the future tightening path and eventually determine the next leg of directional move for the non-yielding yellow metal.

Heading into the key event risk, the US ADP report on private sector employment, though is unlikely to be a game changer, might provide some short-term trading opportunities.

Technical levels to watch

Any subsequent up-move is likely to confront resistance near the $1316 level, above which a fresh bout of short-covering could lift the commodity further towards the $1323-25 supply zone.

On the flip side, the $1303 region (200-day SMA) now seems to protect the immediate downside, which if broken now seems to pave the way for an extension of the metal’s downfall towards $1293-92 support.

FXstreet