FXStreet (Mumbai) - The yellow metal experienced heavy selling at the start of a new week in Asia, on the back of the latest chatter that the Fed may hike discount rates tonight.
Gold heads south towards $ 1070
Currently, gold drops -0.31% at 1073.30, having reached fresh session lows of 1072.60 in early trades. Gold prices came under sharp selling pressure this session as the latest chatter doing rounds that Fed may raise the discount rate it charges to other banks at its Fed announcement due later today. This news increases speuclation of a lift-off in the benchmark rates at the Fed Dec 17 gathering.
Gold tends to lose in a higher interest rate environment as it is a non-interest bearing/ yielding alternative investment asset.
Amid light trading, gold also remains pressured on the back of positive performance seen on the Asian equities. While broad based US dollar strength also continues to weigh on the precious metal. The USD index rises 0.13% to 99.80, on its way to multi-month peaks.
In the day ahead, the bullion will continue to track the broad market sentiment ahead of the US datasets while the Fed announcement will hog the limelight.
Gold Technical Levels
The metal has an immediate resistance at 1080 (round number) and 1086.60 (Nov 19 High). Meanwhile, the major support stands at 1070 (psychological levels), below which doors could open for 1064 (five-year lows).
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