Gold price bounces off lows, but lacks any strong follow-through

London (Aug 1)  Gold reversed an early dip to $1220 area and spiked back closer to the top end of its daily trading range, albeit lacked any firm directional bias.

Reports that the Trump administration is planning to impose 25% tariffs on $200 billion in Chinese goods pushed the US Dollar higher and exerted some fresh downward pressure on dollar-denominated commodities - like gold.

Meanwhile, the downside remained cushioned amid the prevalent cautious mood, with a negative opening across European equity markets providing a minor lift to the precious metal's safe-haven demand.

However, expectations about a gradual Fed monetary policy tightening, reinforced by a goodish pickup in the US Treasury bond yields, kept a lid on any meaningful up-move for the non-yielding yellow metal.

Hence, investors' focus on Tuesday will remain on the latest FOMC monetary policy update and the accompanying statement, where fresh clues over the future rate hike would help determine the commodity's next leg of directional move.

In the meantime, the US macro releases - ADP report on private sector employment and ISM manufacturing PMI, will also be looked upon to grab some short-term trading opportunities.

Technical levels to watch

Immediate resistance is pegged near $1227 level, above which the metal could head back towards testing $1231 intermediate hurdle en-route $1235 supply zone. On the flip side, $1220 area might continue to protect the immediate downside, which if broken could accelerate the fall towards overnight swing low support near $1214 ahead of YTD lows, around the $1212-11 region.

FXstreet