Gold clings to modest recovery gains, around $1270 level

   “¢   A follow-through USD retracement helps build on overnight rebound from 6-month lows.
   “¢   Global trade war fears revive safe-haven demand and provide an additional boost.
   “¢   Positive equities/goodish pickup in the US bond yields might keep a lid on any strong up-move.

Gold built on overnight rebound from six-month lows and continued gaining some positive traction through the early European session on Friday.

The US Dollar extended overnight retracement slide from 11-month tops and was seen as one of the key factors underpinning demand for dollar-denominated commodities – like gold.  

Adding to this, growing concerns about a full-blown global trade war, especially after the EU slapped retaliatory duties on multiple American products worth around $3.2 billion, was cited support for the precious metal’s safe-haven appeal.

However, a positive trading sentiment around global equity markets, coupled with a goodish pickup in the US Treasury bond yields, to some extent, seemed negative supportive factors and might now contribute towards keeping a lid on any meaningful up-move, at least for the time being.

In absence of any major market moving economic releases, the USD/US bond yields dynamics and the broader market risk sentiment might continue to act as important determinants of the commodity’s move on the last trading day of the week.

Technical levels to watch

Immediate resistance is pegged near the $1274-75 region, above which the recovery could get extended towards $1282-84 supply zone (weekly top). On the flip side, $1267 level now seems to protect the immediate downside, which if broken might turn the metal vulnerable to extend its bearish slide towards $1255 support area.