Gold Plummets Below $1300 Mark, Hits 3-Day Lows On Stronger USD

Gold extended its sharp pullback from two-week lows and tumbled below the key $1300 psychological mark during the early North-American session.

The precious metal failed to capitalize on the recent positive momentum and started correcting from the $1310-11 supply zone, the highest level since March 28 touched amid firming expectations that the Fed will hold interest rates steady at least through the end of the year. 

With investors looking past the latest FOMC meeting minutes, a goodish pickup in the US Dollar demand turned out to be one of the key factors prompting some aggressive long-unwinding/fresh selling around the dollar-denominated commodity.

The downward momentum accelerated further following the release of upbeat US economic data, showing that initial weekly jobless claims unexpectedly dropped during the week ending April 6 and sank below 200k for the first time since 1969.

Separately, March’s PPI rose 0.6% m/m in March, which coupled with a solid bounce in the US Treasury bond yields exerted some additional downward pressure on the non-yielding yellow metal and took along some short-term trading stops placed near the $1300 mark.

The bearish pressure, however, eased a bit, helping the commodity to bounce off session lows, around the $1295-94 region, following some fresh dovish comments by St. Louis Fed President James Bullard, saying that March FOMC marked the end of policy normalization.

It, however, remains to be seen if bulls are able to find any meaningful respite or the current downfall marks the resumption of the recent downward trajectory amid fading safe-haven demand on the back of positive mood around equity markets and a bearish technical set-up on the daily charts.

Article by FXStreet