Gold hovering around 10-month low, hawkish Fed weigh

Gold extended its recent depreciating move and dropped to a fresh 10-month low on Thursday, albeit has bounced a bit from $ 1135 touched during early Asian session.

Currently trading around $1138 level, Wednesday's Fed decision to raise interest rates for the first time in 12 months lifted the US Dollar sharply higher and weighed heavily on dollar-denominated commodities - like gold. Adding to this, hawkish outlook signaled more rate-hikes in 2017 and is further denting demand for the non-yielding precious metal. 

Meanwhile, a fresh wave of risk-aversion, as depicted by prevalent negative sentiment around equity markets, is lending some support to the metal's safe-haven appeal and has limited further downslide for the time being.

Later during NA session, the US CPI print for November might add to the Fed expected that inflation could rise back to 2% "over medium term" and attract fresh selling pressure around the yellow metal.

Technical levels to watch

Weakness below $1135 level (multi-month lows) is likely to get extended towards $1127-25 horizontal support before the commodity eventually drops to its next major support near $1110 level. On the upside, any recovery attempt above session high resistance near $1144-45 region now seems to confront strong resistance near $1150 region above which a bout of short-covering could lift the metal towards $1158-60 region.