• The ongoing USD retracement helped limit early downslide.
• Risk-on mood keeps a lid on any meaningful up-move.
Gold quickly reversed a dip to fresh one-month lows, albeit struggled to build on the recovery move and remained well below session tops.
The commodity stalled its recent bearish trajectory and showed some resilience below the key $1200 psychological mark amid a modest US Dollar retracement.
The greenback started correcting from roughly 1-1/2 year tops set in the previous session and was seen as one of the key factors extending some support to the dollar-denominated commodity.
However, a goodish risk-recovery, as depicted by the positive mood across equity markets and which tends to undermine demand for traditional safe-haven assets, kept a lid on any runaway rally for the precious metal.
Market sentiment got a strong boost on Tuesday following reports that China’s Vice Premier Liu He and the US Treasury Secretary Steven Mnuchin have resumed discussions on trade in an attempt to ease trade tensions.
This comes ahead of a scheduled meeting between the Chinese President Xi Jinping and the US President Donald Trump at the Group of 20-nations summit in Argentina, later this month, and prompted some fresh risk-on trade.
Meanwhile, the ongoing slide in the US Treasury bond yields did little to provide any additional boost, with firming expectations for a December Fed rate hike, and again in early 2019, now seemed to collaborate towards capping gains for the non-yielding yellow metal.
It would now be interesting to see if the commodity's intraday bounce is backed by any genuine buying or is solely led by some short-covering, especially after the recent slump of over 3% since the beginning of this month.
Technical levels to watch
Any subsequent up-move is likely to confront immediate resistance near the $1206-07 area, above which a bout of short-covering could lift the metal further towards 100-day SMA hurdle near the $1215 region.
On the flip side, the $1197-96 region now becomes an immediate support to defend, which if broken is likely to accelerate the fall further towards $1188 intermediate support en-route the $1183-81 horizontal zone.
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