Gold price retests 1-week old trading range resistance

New YOrk (May 22)  Gold reversed an early dip to intraday lows near $1288 and is currently placed near session tops, around the $1295-96 region.

The US Dollar struggled to build on its early uptick and was now seen extending overnight corrective slide from YTD tops. With investors looking past the latest optimism over the US-China trade relations, a modest USD profit-taking slide was eventually seen benefitting dollar-denominated commodities - like gold.

This coupled with the prevalent cautious sentiment around European equity markets underpinned demand for traditional safe-haven assets and further collaborated to the precious metal's attempted recovery move.

Meanwhile, a modest uptick in the US Treasury bond yields capped any additional gains for the non-yielding yellow metal, with bulls struggling to make it through a one-week-old resistance near the $1297 region.

Hence, it would be prudent to wait for a strong follow-through buying interest before confirming that the commodity might have bottomed out in the near-term.

Moving ahead, this week's release of the latest FOMC meeting minutes, along with Fedspeaks would be closely scrutinized for clues over the central bank's near-term monetary policy outlook and might eventually help determine the commodity's next leg of directional move.

Technical levels to watch

Momentum beyond $1296-97 area is likely to lift the metal back above the $1300 handle towards retesting the very important 200-day SMA barrier near the $1307 region. On the flip side, the $1286-85 region might continue to protect the immediate downside, which if broken is likely to accelerate the fall further towards $1277 intermediate support en-route its next major support near the $1270-68 region.

FXstreet