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   “¢   A follow-through USD weakness helps regain positive traction.
   “¢   Cautious mood underpins safe-haven demand and remains supportive.
   “¢   Fed rate hike expectations might keep a lid on any strong up-move.

Gold reversed an Asian session dip to $1237.50 area and has now moved back closer to previous session’s swing high, around the $1245 region.

With investors looking past yesterday’s upbeat US economic data – monthly retail sales and Empire State manufacturing index, the US Dollar bears were back in action on Tuesday and underpinned demand for dollar-denominated commodities – like gold.

This coupled with the prevalent cautious mood around equity markets provided an additional boost to the precious metal’s safe-haven appeal and remained supportive of the positive momentum through the early European session.

It, however, remains to be seen if the uptick is backed by any genuine buying interest or would be looked upon as an opportunity to initiate fresh bearish positions amid firming Fed rate hike expectations, which tends to drive flows away from the non-yielding yellow metal.

Hence, today’s key focus would be on the Fed Chair Jerome Powell’s testimony before the Senate Banking Committee, where investors will be looking for fresh clues over the central bank view on monetary policy and eventually position for the commodity’s next leg of directional move.  

Technical levels to watch

On a sustained move beyond the $1247 area, the metal is likely to accelerate the up-move towards $1252 horizontal level en-route $1258 supply zone. On the flip side, the $1240-38 zone now seems to have emerged as an immediate support, below which the fall could get extended towards 200-week SMA support near the $1234 region.