Gold price surrenders early gains to 1-1/2-year tops

London (Jan 25)  Gold surrendered majority of its early gains to the highest since August 2016 and quickly retreated back below $1360 level during the early European session.

The US Dollar tumbled to fresh three-year lows on comments by the US Treasury secretary Steven Mnuchin, saying that he welcomed a weaker currency, and continued benefitting the dollar-denominated commodity through the Asian session on Thursday.

A broad-based greenback sell-off receded a bit following IMF chief Christine Lagarde's comments and prompted some profit-taking at higher levels, especially after the recent upsurge of over 3% since last Thursday.

Further downside, however, seems more likely to be cushioned by a softer tone around the US Treasury bond yields, which tends to underpin demand for the non-yielding yellow metal.

Technical levels to watch

A follow-through retracement below the $1355 immediate support is likely to accelerate the corrective slide back below $1350 level towards its next support near the $1344 region.

On the upside, the $1365-66 area might now act as an immediate resistance, above which the metal is likely to aim towards testing July 2016 highs resistance near the $1375 region.

FXstreet