Gold: In a sideways consolidation phase, around $1230 level

   •  A modest pickup in the USD demand exerts some downward pressure. 
   •  International economic, political worries helped limit immediate downside.

Gold extended its sideways price action on Wednesday and remained confined in a narrow trading range below $1235 level. 

After yesterday's strong upsurge to over three-month tops, and a subsequent retracement, the precious metal now seems to have entered a consolidation phase and was seen oscillating in a narrow trading range amid a combination of diverging forces. 

Intensifying geopolitical tensions, led by Saudi Arabia’s involvement in the murder of a journalist - Jamal Khashoggi, and Italy’s problematic budget underpinned the precious metal's safe-haven demand and helped limit any immediate sharp downfall. 

The positive factor, to some extent, was negated by a modest pickup in the US Dollar demand. This coupled with prospects for gradual Fed rate hikes beyond 2018 collaborated towards capping gains for the dollar-denominated/non-yielding yellow metal. 

In absence of any major market moving economic releases, the commodity remains at the mercy of broader market risk sentiment and the USD price dynamics. Moving ahead, this week's important events/US macro data will now be looked upon to determine the commodity's next leg of directional move. 

Technical levels to watch

Immediate support is now pegged near the $1226 level, below which the corrective slide could further get extended towards $1221 intermediate support en-route the $1216-15 region. On the flip side, momentum back above $1235 horizontal zone might continue to confront some fresh supply near the $1240 region, which if cleared should lift the metal further towards $1248-50 supply zone.