Gold approaches $1200 amid broad-based USD strength

Gold extended its fall for the third consecutive day driven by increased odds of a March rate hike. At the moment the yellow metal is retreating 0.6% at $1208.50 heading for the lowest daily close since early February.

US dollar index stays above 102

Private-sector employment in the U.S. increased by 298,000 jobs from January to February according to the official February ADP National Employment Report.The probability of a March rate hike jumped to 91% following the data and DXY leaped above 102, where it's sitting as we approach the end of the day.

How low can Gold go? 

We have witnessed strong Gold rallies following the previous rate hikes in December of 2015 and 2016. Considering how the markets have been pricing a March hike since last week amid comments from FOMC members and positive data, one may think that the precious metal's fall could lose momentum in near-term. On the other hand, historical trends show that spring tends to be a period of low Gold demand, which may limit the corrections.

Levels to watch

Technical supports for the precious metal are aligned at $1200 (psychological level), $1195 (Jan. 19 low) and $1185 (Fib. 50% of late Dec. to late Feb. uptrend). On the upside, the first hurdle lines up at $1221 (50-DMA), followed by $1230 (Fib. 23.6%) and $1237 (20-DMA).