Gold flirts with session lows, around $1985 region ahead of FOMC minutes

• Gold edged lower on Wednesday and erased the previous day’s positive move to over one-week tops.
• A modest USD bounce, the upbeat market mood prompted traders to take some profits off the table.
• The ongoing fall in the US Treasury bond yields might help limit the slide ahead of the FOMC minutes.

Gold maintained its offered tone through the mid-European session and was last seen hovering near the lower end of its daily trading range, around the $1985 region.

The precious metal came under some selling pressure on Wednesday and reversed the previous day's positive move to over one-week tops, around the $2015-16 region. Given the recent strong rally of over $150 from multi-week lows, a combination of factors forced investors to take some profits off the table and led to the modest pullback.

This coupled with a modest US dollar rebound from the lowest level since April 2018 exerted some additional downward pressure on the dollar-denominated commodity. The USD uptick lacked any obvious fundamental catalyst and could be solely attributed to some repositioning trade ahead of the release of the latest FOMC meeting minutes.

Meanwhile, the political deadlock over the next round of the US fiscal stimulus measures, along with concerns over the US economic recovery might extend some support to the commodity's safe-haven status. This, coupled with declining US Treasury bond yields should further contribute to limit any meaningful slide for the non-yielding yellow metal.

Investors might also be reluctant to place any aggressive bets heading into Wednesday's key event risk. This makes it prudent to wait for some strong follow-through selling before confirming that the positive move might have already run out of the steam and positioning for the resumption of the recent sharp corrective slide from record highs.

Technical levels to watch