Gold turns lower for the third straight session, back closer to $1240 level

   •  The prevalent USD bullish sentiment prompts some fresh selling.
   •  Rebounding US bond yields exert additional downward pressure. 
   •  US-China trade optimism further dampens safe-haven demand.

Gold reversed an early uptick to $1246 area and has now drifted into negative territory for the third consecutive session.

The precious metal struggled to build on last week's strong up-move to five-month lows, with a combination of factors holding the bulls on the defensive through the early trading hours on Wednesday. 

The US Dollar stood tall near one-month tops and was seen as one of the key factors weighing on the dollar-denominated commodity. The greenback extracted some support from rebounding US Treasury bond yields, which staged a goodish rebound from three-month lows and also collaborated towards driving flows away from the non-yielding yellow metal.

The precious metal was further pressure by fading safe-haven demand amid the prevalent risk-on mood, supported by renewed optimism over improving US-China trade relations. Market sentiment got an additional boost after the US President Donald Trump said that he would intervene in Huawei CFO Case if it helps close a trade deal. 

Despite a combination of negative forces, the downside, so far, has remained limited and this week's pull-back might still be categorized as corrective in nature. Market participants now look forward to the latest US consumer inflation figures, due later during the early North-American session for some short-term impetus.

The key focus, however, will be on the latest FOMC monetary policy update, scheduled next week, which might provide fresh clues over the central bank's monetary policy outlook for 2019 and eventually help determine the commodity's next leg of a directional move.

Technical levels to watch

A follow-through downward momentum could get extended towards the $1238-37 horizontal zone, which is followed by support near the $1234 region and $1230 level. On the flip side, any meaningful up-move might continue to confront some fresh supply near the $1249-50 region, above which the commodity seems to aim towards testing the $1258-60 supply zone.