Gold prices dipped lower on Monday as a fall in the euro despite rising political indecision in Germany moved the dollar to a nearly oneweek high lessening the demand for the precious metal.
Chancellor Angela Merkel said on Monday that she would prefer new elections rather than lead a minority government after talks to form the countrys next government collapsed overnight. This raised concerns over the future leadership position of chancellor Merkel.
The U.S. dollar index, which measures the greenback’s strength against a tradeweighted basket of six major currencies, rose by 0.31% to 93.90.
The outlook of higher interest rates added to gold weakness as the Federal Reserve’s December 12-13 meeting draws closer amid strong expectations the central bank will raise rates.
The last session of Gold future market is clearly a result of a retest in support line of the “Ascending broadening wedge” channel which triggered the bullish momentum. The market is expected to continue on the same trend and the rally could test $1282- 1284(29420-29470) levels in the upcoming sessions. Resistance holds at $1286(29520) and support holds at $1276(29270).