Gold retreats from 2-week tops, drifts into negative territory

• Gold failed to capitalize on early uptick to two-week tops.
• Reviving safe-haven demand does little to lend support.
• Bears eye a break below a one-week-old ascending channel.

Gold failed to capitalize on its early uptick to near two-week tops and dropped to fresh session lows, around the $1560 region in the last hour.

Concerns of the corona-virus outbreak in China led to a turnaround in the global risk sentiment, which was evident from a negative trading sentiment around equity markets. The risk-off mood provided a modest lift to traditional safe-haven assets and helped the precious metal gained some follow-through traction on Tuesday.

Initial uptick lacked bullish conviction

The commodity climbed to the highest since January 8, around the $1568 region, albeit lacked any strong follow-through. The uptick fizzled out rather quickly amid diminishing odds of any further interest rate cuts by the Fed, which turned out to be one of the key factors capping gains for the non-yielding yellow metal.

This coupled with the prevailing bullish tone surrounding the US dollar, supported by expectations that the US economy will continue to expand, exerted some fresh downward pressure on the dollar-denominated commodity and collaborated to the intraday pullback.

From a technical perspective, the commodity is now flirting with the lower end of over one-week-old ascending trend-channel, which if broken might be seen as a key trigger for bearish traders and set the stage for the resumption of the recent retracement slide from multi-year tops set earlier this month.

Technical levels to watch