Gold recovers early lost ground, turns higher for the day

London (July 24)  Gold recovered early lost ground to a session low level of $1218 and has now turned higher for the day, recovering part of the overnight downfall.

The US Dollar struggled to build on the previous session's positive momentum/early gains and was seen as one of the key factors behind the latest leg of up-move since the early European session. It is worth noting that a weaker greenback tends to underpin demand for dollar-denominated commodities - like gold.

This coupled with retracing US Treasury bond yields, with the benchmark 10-year yield correcting from five-week tops set on Monday, provided an additional boost to the non-yielding yellow metal and remained supportive of the uptick.

Meanwhile, the prevalent risk-on mood, as depicted by strong rally across European equity markets and which tends to weigh on the precious metal's safe-haven demand, did little to prompt any fresh selling, albeit might now contribute towards capping any strong up-move.

In absence of any major market moving economic releases from the US, the USD price dynamics might continue to act as an exclusive driver of the commodity's momentum on Tuesday. However, this week's important US macro data, especially the first Q2 GDP growth figures, will play an important role in determining the next leg of the directional move.

Technical levels to watch

Any subsequent up-move is likely to confront immediate resistance near $1231 level, above which a fresh bout of short-covering could lift the metal further towards $1240 supply zone. On the flip side, the $1218-16 region now seems to have emerged as an immediate support, which if broken might turn the commodity vulnerable to slide back towards one-year lows, around the $1212-11 area.

FXstreet