Gold drops to fresh 7-week lows, Fedspeak in focus

Gold prolongs its downward trajectory into a sixth day this Wednesday, fading a brief recovery seen near 1230 mark, as expectations surrounding a June/ July Fed rate hikes gather further steam.

Gold eyes $ 1220

Currently, gold trades -0.17% lower at 1223.45, recovering slightly from fresh seven-week lows struck at 1222.79 in the last hour. The bullion stalled its recovery mode just ahead of 1230 levels and fell back in the red zone as the bulls were heavily hit by the persistent risk-on rally seen in the global equities. Among the European indices, Germany’s DAX jumps +1.16, the UK’s FTSE rallies +0.60%, while the pan-European benchmark, the Euro Stoxx advances +1.18%.

However, the downside appears cushioned as the US dollar remains broadly muted, consolidating previous upsurge backed by hawkish Fedspeak and upbeat home sales data. Meanwhile, a stronger US dollar makes the dollar-denominated gold more expensive for the holders in other currencies.

Nothing of note for the bullion, as the US docket remains fairly light, with a couple of second-tier economic data on the cards, which is likely to have limited impact on the USD. Besides, a string of Fedspeaks from FOMC’s Harker, Kashkari and Kaplan will be closely heard by the gold traders for fresh hints on the Fed interest rates outlook.

Gold Technical Levels

The metal has an immediate resistance at 1235 (round figure) and 1242.44 (5-DMA). Meanwhile, the support stands at 1220 (round number) below which doors could open for 1214.17 (100-DMA).