Gold surrenders early gains, slides back towards daily lows

   •  Resurgent USD demand prompts some fresh selling in the last hour.
   •  Hawkish comments by Fed’s Kaplan exert some additional pressure.
   •  Still remains on track to post first weekly gains in the previous three. 

Gold erased a major part of its early gains to the $1208-09 region and is currently placed at the lower end of its daily trading range. 

Despite today's weaker than expected release of the US monthly retail sales data for August, an upward revision of prior month's already solid figures provided a strong boost to the US Dollar demand and was seen as one of the key factors weighing on the dollar-denominated commodity.

Adding to this, hawkish comments by Dallas Fed President Robert Kaplan, saying that the Fed should continue raising rates gradually, patiently and inflation to edge up a bit above 2% goal, exerted some additional downward pressure on the non-yielding yellow metal. 

Meanwhile, the prevalent risk-on mood, as depicted by a positive tone across global equity markets, further dented the precious metal's safe-haven status and collaborated to the intraday slide, back closer to the key $1200 psychological mark.

Even at current levels, the commodity remains on track to end the week with modest gains for the first time in the previous three, though the recovery remains muted amid firming September Fed rate hike expectations, and a possible additional rise in December.

Technical levels to watch

Any fresh up-move might continue to confront some fresh supply near the $1208-09 zone and is followed by a strong horizontal resistance near the $1214-15 region. On the flip side, weakness back below $1200 handle is likely to accelerate the slide towards $1195 intermediate support en-route the $1191-90 region.

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