Gold: tepid recovery from multi-month low turns short-lived

Gold snapped two consecutive days of recovery move and turned lower on Tuesday, reversing all of its recovery gains posted in the previous session.

Currently trading around $1133-32 region, testing session lows, renewed greenback buying interest, led by BoJ status-quo monetary policy stance, which added on the hawkish FOMC-led strong greenback strength, is seen denting demand for dollar-denominated commodities - like gold. Moreover, markets continue to build on expectations of faster Fed rate-tightening cycle in 2017 and driving flows away from non-yielding precious metal. 

Adding to this, a fresh wave of risk-on trade, with most major European equity indices moving in positive territory, is further weighing on traditional safe-haven assets and exerting selling pressure around the yellow metal. 

The US economic data would continue to drive investor expectations over the next Fed rate-hike action in 2017 and hence, focus would be on this week's key US macro data, including the final GDP print for Q3 2016, durable goods orders and the Fed's preferred inflation gauge, Core PCE Price Index. The incoming data would help investors determine a follow through buying interest around the US Dollar and eventually provide fresh impetus for the metal's near-term trajectory. 

Technical levels to watch

A follow through selling pressure is likely to drag the commodity back towards $1127 support area below which a fresh leg of weakness would turn the metal vulnerable to extend its near-term depreciating move further towards $1110 support area en-route $1100 psychological mark. On the upside, $1137-38 region now becomes immediate hurdle, which if cleared might trigger a short-covering rally towards $1150 intermediate resistance ahead of the next major resistance near $1158-60 region.