Gold recovers early lost ground, back above $1240 level

Gold recovered a major part of its early slide and moved to the top end of its daily trading range, above the $1340 region post-US data.

The Empire State Manufacturing Index collapsed to -8.6 in June - marking the lowest level since Oct 2016, as against a small drop expected from +17.8 recorded in the previous month. This resulted in a quick drop in the US Dollar and provided a goodish lift to the dollar-denominated commodity.

The latest disappointment cemented expectations that the Fed will eventually move to cut interest rates by the end of this year, which was evident from an intraday turnaround in the US Treasury bond yields and further collaborated towards driving flows towards the non-yielding yellow metal.

This coupled with the prevalent cautions mood, amid fears of a further escalation in trade tensions between the world's two largest economies and rising geopolitical tensions, continued benefitting the precious metal's safe-haven status and remained supportive of the intraday goodish up-move.

It, however, remains to be seen if bulls are able to capitalize on the positive momentum or hold back from placing any aggressive bets as the key focus remains on this week's key event risk - the latest FOMC monetary policy update, scheduled to be announced on Wednesday.

Technical levels to watch