Gold recovers early lost ground, but lacks any follow through

   •  USD selling reemerges and helps regain some traction. 
   •  Reviving safe-haven demand provides an additional boost.
   •  Fed rate hike expectations seemed to cap additional gains.

Gold has managed to recover early lost ground to over two-week lows and is currently placed at the top end of its daily trading range. 

A fresh wave of US Dollar weakness, led by an upsurge in the British Pound and the shared currency, was seen as one of the key factors underpinning demand for dollar-denominated commodities - like gold.

Adding to this, deteriorating investors' appetite for riskier assets, as depicted by a sea of red across global equity markets, provided an additional boost to the precious metal's safe-haven appeal and collaborated to the recovery move.

Despite supporting factors, the rebound lacked any strong conviction and was being capped by expectations for the upcoming Fed rate hike move. Apart from the FOMC decision, the central bank's updated economic projections, along with the new 'dot plot' would help determine the next leg of a directional move for the non-yielding yellow metal.

However, the recent worries over a potential global trade war might continue to dent investors' confidence and help limit sharp near-term downfall for the commodity, at least for the time being.

Technical levels to watch

Immediate resistance is pegged near $1316 level, above which a bout of short-covering could lift the metal back towards $1326 supply zone. On the flip side, $1308-07 area might continue to lend some immediate support and is closely followed by the very important 200-day SMA support near the $1305 region, which if broken would pave the way for an extension of the commodity's near-term depreciating slide.