• A combination of factors kept exerting downward pressure on Tuesday.
• Short-covering helps rebound sharply and recover a major part of early losses.
Gold continued losing ground through the mid-European session and tumbled to a one-week low in the last hour, albeit quickly recovered thereafter.
The precious metal extended overnight retracement slide from near two-week tops and was further weighed down by a combination of factors. Resurgent US Dollar demand was seen as one of the key factors prompting some fresh selling around dollar-denominated commodities - like gold.
This coupled with positive trading sentiment around European equity markets, pointing to improving risk appetite, further dented the precious metal's safe-haven appeal. The risk-on mood was reinforced by an uptick in the US Treasury bond yields, which exerted some additional downward pressure on the non-yielding yellow metal.
Meanwhile, the latest leg of sharp rebound over the past hour or so lacked any obvious catalyst and hence, it remains to be seen if the up-move is backed by any genuine buying or is solely led by some short-covering amid absent market moving economic releases from the US.
Technical levels to watch
Any subsequent up-move is likely to confront fresh supply near $1260 level, above which the commodity is likely to aim back towards retesting overnight swing high resistance near the $1265-66 region.
On the flip side, the $1247-46 region might continue to protect the immediate downside, which if broken might turn the metal vulnerable to slide back towards challenging YTD lows support near the $1238 area.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.