Gold hangs closer to 5-month lows, focus remains on FOMC

   •  Investors look past the latest US political development.
   •  Reviving USD demand prompts fresh selling. 
   •  US CPI/FOMC announcement holds the key.

Gold came under some renewed selling pressure on Wednesday and eroded majority of its previous session's recovery move from near 5-month lows. 

With investors looking past an upset win by a Democrat candidate in a deeply Republican state of Alabama, a modest pickup in the US Dollar demand, which remained supported by yesterday's upbeat US PPI print, prompted some fresh selling around dollar-denominated commodities - like Gold.

Investors focus would remain glued to the highly anticipated FOMC decision, due to be announced later during the NY trading session. Given that an eventual rate hike move is nearly fully priced in the markets, the accompanying rate statement and economic projections would help investors determine the next leg of directional move for the non-yielding yellow metal.

Heading into the key event risk, the latest US inflation figures would have implications over the central bank's monetary policy outlook for 2018 and eventually provide some short-term trading impetus later during the NA session.

Technical levels to watch

Weakness back below $1240 level might continue to find some support near the $1236-35 region, which if broken would turn the commodity vulnerable to extend the slide towards $1227 support area.

On the upside, $1245 level now seems to have emerged as immediate resistance, above which a bout of short-covering could lift the metal back towards an important supply zone near the $1252 region.