Gold rallies back closer to weekly tops, around $1335 area

 Gold caught some aggressive bids on Wednesday and built on the previous session's goodish rebound from over one-week lows.

Fears of a further escalation in the US-China trade tensions provided a strong boost to the precious metal's relative safe-haven status and turned out to be one of the key factors behind a follow-through up-move on Wednesday. The US President Donald Trump said on Tuesday that he would further raise tariffs on Chinese imports if he cannot make progress in talks with his Chinese counterpart at the G20 summit later this month. 

The global risk sentiment took a knock in reaction to the comments and was evident from a fresh wave of selling across global equity markets. The risk-off mood was further reinforced by the latest leg of a slide in the US Treasury bond yields, which affected the US Dollar in a negative manner and underpinned the dollar-denominated commodity.

Meanwhile, Trump on Tuesday also complained that the Fed was keeping interest rates way too high, which coupled with softer US Producer Price Index raised bets for an eventual Fed rate cut action, sooner rather than later and provided an additional boost to the non-yielding yellow metal. 

The commodity has now recovered a major part of its weekly losses as market participants now look forward to the US economic docket - highlighting the release of the latest US consumer inflation figures, in order to grab some meaningful trading opportunities later during the early North-American session.

Technical levels to watch