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Gold Turns Negative after US Dollar Trim Losses on Stronger ISM Data
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Gold Turns Negative after US Dollar Trim Losses on Stronger ISM Data
Gold is reversing from 100-day SMA near $1220 level and has now turned negative to currently trade below $1215 after the US Dollar trimmed its losses on the back of better-than-expected ISM manufacturing data.
Tuesday's up-move in the precious metal was led by some weak economic numbers from the US that trimmed expectations of a June Fed rate-hike. However, today's ISM Manufacturing PMI, which printed a better-than-expected reading of 51.3, kept hopes alive of an imminent rate-hike and assisted the greenback to trim its losses.
Rising expectations of a June Fed rate-hike would lead to a stronger US Dollar that hurts demand for dollar-denominated commodities, like gold, and had been the key reason for a slide of around 6% for the precious metal during May from level not seen since Jan. 2015 ($1300).
From technical perspective, failure to strengthen back above 100-day SMA and a subsequent break below now seems to have turned the commodity vulnerable to further downside.
Technical levels to watch
From current levels, bulls would be looking to defend $1205 intermediate support, ahead of $1200 psychological mark support. Failure to hold these immediate support levels seems to drag the metal towards $1190 (Feb. 16 low).
Meanwhile on the upside, 100-day SMA near $1219-20 area remains immediate strong hurdle to clear, which if conquered should assist the commodity to extend its recovery further towards $1225 horizontal resistance.