- Gold fell slightly on Thursday and eroded some of the positive move from the previous day.
- The downtick lacked an obvious fundamental catalyst and will likely remain limited.
- Investors are now watching the US GDP report and Powell’s speech for further directional momentum.
Gold maintained its offered tone at the start of the European session and was last seen hovering near the lower end of its daily trading range, around the $ 1940 region.
The precious metal failed to capitalize on the previous day’s positive rebound against the neighborhood at $ 1,900, or a two-week low, and encountered new supply on Thursday. The downtick lacked an obvious fundamental catalyst and could only be attributed to some technical sales in the $ 1955 supply area.
However, a combination of factors has kept investors from placing aggressive bearish bets and could help limit larger losses. The US dollar has remained on the defensive despite expectations for accommodative signals from the Fed, which, in turn, was seen as one of the key factors that extended some support to the dollar-denominated commodity.
In addition, a more subdued risk tone further supported demand for the precious metal’s safe haven. The anti-risk flow was bolstered by a further fall in yields on US Treasury bonds, which could further help limit any significant drop for the unproductive yellow metal, at least for now.
It is therefore prudent to wait for strong follow-up selling before positioning for any other short-term depreciation movement. Market participants are now eagerly awaiting the release of the preliminary report (second estimate) on US GDP on Thursday. The main focus, however, will remain on Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium.