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Gold sheds gains on hopes of swift recovery after China data

Gold prices erased early gains on Monday as hopes of a faster economic recovery got a boost from better-than-expected Chinese industrial output data, while a surge in U.S. Treasury yields kept bullion under pressure.

· Spot gold was steady at $1,726.54 per ounce by 0401 GMT, after rising as much as 0.4% earlier in the session. U.S. gold futures were up 0.3% to $1,724.70.

· “There’s the general dynamic where yields are keeping the trend for gold to the downside,” said IG Market analyst Kyle Rodda, adding the gold market is technically bearish.

″(Gold) bounced off really oversold levels, so we got some people just trying to buy the dip a little bit and take advantage of that. But, the short-term fluctuations tend to be aligned with the U.S. dollar. No one knows where the U.S. dollar is really heading at this point in time.”

· The U.S. dollar held firm, supported by a spike in benchmark Treasury yields to more than one-year highs on continued U.S. economic optimism after a $1.9 trillion recovery package was signed into law last week.

· Encouraging growth data has also dampened the appeal of the safe-haven metal. Data earlier showed China’s industrial output growth quickened in January-February, beating expectations.

· Gold prices fell to a nine-month low of $1,676.10 last week, pressured by accelerating bond yields, which increase the opportunity cost of holding non-yielding bullion.

· Investors are now awaiting the U.S. Federal Reserve meeting this week for direction on monetary policy.

· “FOMC meeting this week will be a key driver for the gold market. A strong show of dovish intent by (Fed Chair) Powell and team could send Treasury yields lower and lift gold prices higher,” Howie Lee, an economist at OCBC Bank wrote in a note.

· Gold Daily Forecast – Sideways Trading Continues, Brace for a Breakout

Daily Support and Resistance

S1 1658.18

S2 1688.49

S3 1708

Pivot Point 1718.8

R1 1738.31

R2 1749.11

R3 1779.42

GOLD continues trading with a neutral bias at 1,723, exhibiting a strong bullish retracement above the support level of 1,722. On the higher side, the bullish crossover of 1,739 can extend further buying trend until 1,754 level. The precious metal gold has recently crossed over the 50 periods EMA suggesting a bullish bias. Today, buying can be seen from 1,723 until 1,739 level. The MACD and RSI neutral a buying trend today; therefore, the precious metal may head further higher until 1,739. Good luck!

· Silver rose 0.4% to $26.02 an ounce.

· Palladium fell 0.5% to $2,358.68.

· Platinum was up 0.2% at $1,207.

Reference: CNBC, FX Leaders