• A modest USD retracement/cautions mood helps regain some positive traction.
• Fed rate hike prospects/surging US bond yields seemed to cap strong gains.
Gold reversed an early dip to $1219 area and is currently trading with modest gains, near the top end of its daily trading range.
The commodity stalled this week's retracement slide from 2-1/2 month lows and has now bounced back closer to 100-day SMA, just below the $1225 region. The US Dollar struggled to preserve/build on the early momentum to near two-week tops and was seen as one of the key factors underpinning demand for the dollar-denominated commodity.
This coupled with deteriorating investors’ risk-appetite, as depicted by a cautious mood across equity markets, and renewed US-China trade war fears provided an additional boost to the precious metal's safe-haven appeal.
However, a fresh leg of an upsurge in the US Treasury bond yields, amid firming prospects for a gradual Fed rate hike path beyond 2018, especially after yesterday's release of the latest FOMC meeting minutes, might keep a lid on any runaway rally for the non-yielding yellow metal.
In absence of any fresh catalyst, in terms of major market-moving economic releases, it would be prudent to wait for a sustained move beyond 100-day SMA before traders start positioning for any further near-term/intraday appreciating move.
Technical levels to watch
Sustained move beyond the 100-DMA barrier, near the $1226 region, is likely to get extended back towards 2-1/2 month swing high, around $1233 before the commodity aims towards testing the $1250 supply zone.
On the flip side, the $1219-17 region might continue to protect the immediate downside, below which the metal is likely to accelerate the slide back towards a resistance break-point, now turned support near $1210 level.
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