Gold at 5-1/2-month low on stronger USD after Yellen's testimony

After a brief pause on Tuesday, Gold resumed with its near-term depreciating move and dropped to the lowest level since early June.

Spot prices were down for third straight session and traded at a 5-1/2-month low level around $1208 amid broad based greenback strength, which tends to dent demand for dollar-denominated commodities - like gold. The buck continues to soar, with the overall US Dollar Index hitting its highest since April 2003, after comments from the Fed Chair Janet Yellen, during her testimony before the Joint Economic Committee late Thursday, reinforced expectations that the US central bank would raise interest rates at its December meeting and is eventually weighing on non-yielding precious metal.

Meanwhile, continuous rise in US equity market, on expectations of aggressive fiscal spending by Trump administration, and the prevalent risk-on mood in Asian equity markets is further driving flows away from traditional safe-haven assets and exerting selling pressure around the yellow metal. The metal has lost nearly 10% from post US presidential election swing highs and is now set to record second consecutive week of steep losses.

Technical levels to watch

A follow through selling pressure below June lows support near $1206 level, the metal seems vulnerable to break through $1200 psychological mark and aim towards mid-Feb. low support near $1190 area. Meanwhile on the upside, $1211 level now seems to act as immediate resistance above which a bout of short-covering could lift the metal towards $1218-19 resistance en-route $1227-29 strong resistance zone.

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