FXStreet (Mumbai) – Gold prices came under renewed selling pressure this Thursday after the Asian traders sold-off the precious metal responding to the Fed’s historic rate hike and gradual tightening path.
Gold surrenders 1070 barrier
Currently, gold drops nearly 1% to 1066.60, and heads towards post-FOMC lows reached at 1061.50 levels. Gold faces double whammy in terms of a hawkish Fed on one hand and the renewed risk-on rally in the Asian equities on the other. Asian markets cheered the Fed rate hike news that restored investors’ confidence in the US economic growth prospects, dulling gold’s appeal as a safe-haven. The Nikkei jumps 2.30%, Australia’s ASX rallies almost 2% while China’s A50 index advances 2.14%.
On Wednesday, the Fed raised the target range for the Fed funds rate by 25bps as expected, and indicated that gradual increases are likely with a a further 100 basis points of tightening seen next year. Gold tends to suffer from a higher interest environment as it is a non-interest bearing investment asset.
Gold Technical Levels
The metal has an immediate resistance at 1076.70 (Dec 14 High) 1080 (round number). Meanwhile, the support stands at 1061.50 (Dec 16 Low), below which doors could open for 1058.20 (Dec 15 Low).
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(Market News Provided by FXstreet)