Gold consolidates overnight strong gains, around $1310 level

Gold held on to its overnight sharp recovery gains from closer to 4-week lows and was being supported by prevalent risk-off environment. 

On Monday, N. Korea’s foreign minister Ri Yong Ho told reporters in New York that a weekend tweet by the US President Donald Trump is counted as a declaration of war and that Pyongyang reserved the right to take countermeasures, including shooting down US bombers even if they are not inside the North Korean airspace.

   •  China U.N. envoy - North Korea, US rhetoric 'too dangerous'

The comments triggered a fresh was of risk aversion trade, reinforced by a slump in the US Treasury bond yields and boosted the precious metal's safe-haven appeal.

This coupled with a modest US Dollar pull-back further benefitted dollar-denominated commodities, helping the yellow metal to recover from an intraday low level of $1289 and move back above the $1300 handle. 

The commodity now seems to have entered a consolidation phase as investors look forward to the Fed Chair Janet Yellen's speech on “inflation, uncertainty, and monetary policy”, in Cleveland later today. 

   •  Yellen to speak on 26th September (Inflation, Uncertainty, and Monetary Policy) - Nomura

Yellen's comments would be closely scrutinized for hints about a possible December rate hike move, which would eventually provide some fresh impetus for the non-yielding metal.

Technical levels to watch

Immediate resistance is pegged near $1315-16 area, above which the metal is likely to dart towards $1320 intermediate resistance ahead of $1328-30 strong hurdle. 

On the flip side, $1305 level, closely followed by $1300 round figure mark, now becomes immediate support levels to defend, which if broken could drag the commodity back towards $1291-89 strong support.