Gold struggling near $1270 level, Fed minutes holds the key

After two days of steep losses, gold struggled to register any meaningful recovery and held weaker near yesterday’s closing level around the $1271-70 region. 

The precious metal extended its pullback from over two-month lows, touched in the aftermath of softer US CPI print on Friday, and remained within striking distance of multi-day lows printed in the previous session. 

Tuesday's upbeat US economic data added to the already weaker sentiment around the yellow metal, which was being weighed down by fading safe-haven demand on easing geopolitical tensions between the US and N. Korea. 

Adding to this, the US Dollar was seen building on the recent recovery move and further undermined demand for dollar-denominated commodities - like gold. 

Investors’ focus on Wednesday would remain glued to the release of minutes from the latest FOMC meeting in July, which might provide some fresh clues over the pace of potential interest rate hikes and eventually drive the non-yielding metal in the near-term. 

   •  FOMC minutes preview – Barclays

Technical levels to watch

On a sustained weakness below $1267-65 area, the commodity is likely to accelerate the slide back towards 100-day SMA support near the $1254 region with some intermediate support near $1261 level. 

On the upside, any recovery move might now confront some fresh supply near $1277 area, above which the metal is likely to surpass $1280-81 resistance area and aim back towards recent daily closing highs resistance near $1289 level.