Gold off multi-month lows, recovery attempts could be short-lived

Having dropped to a fresh 9-1/2 month low, Gold managed to recover lost ground and now seems to have stabilized in neutral territory.

Currently trading around $1187 region, absolutely unchanged from yesterday's multi-month low closing level, a minor greenback retracement, as measured by the overall US Dollar Index, is providing some support to dollar-denominated commodities - like gold. Moreover, the prevalent cautious sentiment around European equity markets is also extending support to the precious metal's safe-haven appeal.

Moreover, possibilities of traders taking some profits off the table, following yesterday's sharp sell-off, could have also contributed to the metal's recovery from session low amid thin liquidity conditions on the back of Thanksgiving Day holiday in the US. 

Meanwhile, Wednesday's FOMC meeting minutes reaffirmed December Fed rate-hike expectations, and has also fueled expectations of faster Fed rate-tightening cycle in 2017, which might now continue to weigh on non-yielding precious metal and restrict any swift recovery even from near-term oversold conditions. 

Technical outlook

Lukman Otunuga, Research Analyst at ForexTime (FXTM), notes, "When studying the metal in a technical fashion, prices can be said to be extremely bearish on the daily timeframe. The candlesticks are trading below both the 20 and 200 SMA while the MACD trades to the downside. Previous support around support around $1200 could transform into a dynamic resistance which could trigger another decline lower towards $1170."

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