Gold price erases gains despite weak European stocks

Frankfurt (Aug 21)  Gold prices erased gains even though the major European indices opened lower in line with the risk aversion across the globe.

USD recovers:  The bid tone on the USD recovered slightly in the early European session, thereby making gold costlier in non-USD terms. The metal backed-off from the high of USD 1167.80/Oz to trade largely unchanged on the day around USD 1155/Oz. The move lower from the daily highs contradicted a 1.52% drop seen in the pan-European Stoxx 600 index.

The metal has been the top beneficiary of the risk aversion and the drop in the September Fed rate hike bets. The sharp turn lower from the daily highs seen in gold could have also been due to overbought technical factors.

Gold Technical Levels

The immediate support is located at 1148.50 (July 8 low), under which the metal could drop to 1132.90 (Nov 2014 low). On the other hand, resistance is seen at 1175.70 (July 6 high) and 1200.00 levels.

Source: FXstreet