Gold corrects from 1-month tops, downside seems limited
| • Improving risk-sentiment prompts some profit-taking during the Asian session.
• Subdued USD price action lends some support and might help limit the downside.
Gold witnessed some profit-taking move on Tuesday and eroded a part of the previous session's strong up-move to near one-month tops.
The overnight uptick was supported by an inversion of the 3-month and 10-year Treasury yields for the first time since 2007, which sparked fears of a potential US recession and underpinned the precious metal's relative safe-haven demand.
Bulls, however, failed to capitalize on the positive momentum, rather opted to take some profits off the table during the Asian session amid some initial signs of stability in the global financial markets and recovery in other riskier assets - like equities.
Meanwhile, a subdued US Dollar price action extended some support to the dollar-denominated commodity. This coupled with the ongoing Brexit drama and uncertainties over the US-China trade negotiations might further collaborate towards limiting any sharp corrective slide.
Hence, it would be prudent to wait for a strong follow-through selling before confirming that the commodity might have topped out in the near-term and traders start positioning for any further near-term depreciating move for the commodity.
Today's US economic docket, featuring the release of housing market data - housing starts and building permits, followed by the Conference Board's Consumer Confidence Index will now be looked upon for some short-term trading opportunities.
Technical levels to watch
Immediate support is pegged near the $1315-14 region, below which the commodity is likely to correct further towards $1309 horizontal level en-route the key $1300 psychological mark. On the flip side, the $1321-22 area now seems to have emerged as an immediate hurdle, which if cleared should lift the metal further towards its next major supply zone near the $1329-30 region.
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