The Gold bullion regained momentum and climbed back into the positive territory as the US dollar turned lower against its major peers. However, the upside looks restricted as risk-on sentiment returned to markets following overnight recovery in the oil prices. The demand for the higher-yielding/ risk currencies is on the rise amid improving risk appetite on rallying Asian stocks, which keeps a lid on the prices.
Overnight, gold inched up in quiet, restrained trading as investors continued to await next week’s interest rate decision by the Federal Reserve for further indications on the path of tightening the U.S. central bank will embark on for the remainder of 2016.
Gold to remain in a holding pattern for the next several days ahead of the Federal Open Market Committee’s (FOMC) interest rate decision on April 27. Any rate hikes this year are viewed as bearish for gold which struggles to compete with high-yield bearing assets in rising rate environments.
The precious metal failed to sustain at higher levels in the last US session and extended its overnight retreat towards hourly 200-SMA around 1243-42 levels, before finding fresh bids in early Asia and swung back into gains. Looking ahead, the bullion now awaits the US datasets for fresh USD moves, while the upcoming ECB meeting is also expected to have significant impact on the USD priced-in gold.