Gold recovers early lost ground, back closer to 3-1/2-month highs

   •  Goodish USD rebound prompts some early profit-taking.
   •  Fading safe-haven demand adds to the downward pressure.
   •  Sliding US bond yields lend immediate support ahead of FOMC minutes.

Gold retreated after hitting a 3-1/2 month high and dropped to an intraday low near $1312, albeit has managed to recover majority of its lost ground.

The US Dollar recovered from its lows and prompted traders to take some profits off dollar-denominated commodities - like gold amid near-term overbought conditions. 

Adding to this, the prevalent risk-on environment was also seen weighing on traditional safe-haven assets and further collaborated to the precious metal's modest corrective slide.

However, a weaker tone around the US Treasury bond yields, which tends to boost demand for the non-yielding metal, helped limit deeper losses and rebound from lower levels. 

Against the backdrop of recent bullish breakthrough technically important daily moving averages (100 & 200-day) and a sustained close above $1300 mark, today's pull-back might still be categorized as consolidation phase and the yellow metal still seems poised to extend its near-term upward trajectory.

Having said that, today's FOMC meeting minutes, which would be looked upon for the central bank's monetary policy outlook for 2018, would play a crucial role in determining the commodity's next leg of directional move.

Technical levels to watch

Immediate resistance remains near the $1325-26 region, above which spot prices could rise towards $1331-33 hurdle en-route $1348-50 strong resistance. On the flip side, weakness below $1312-11 area (session low) could prompt some additional profit-taking slide back towards $1303 level ahead of $1297 support.