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  • The overnight break through the neckline support led to some follow-through selling on Tuesday.
  • Slightly oversold conditions on hourly charts prompted some intraday short-covering bounce.
  • Any subsequent recovery is likely to remain capped and might still be seen as a selling opportunity.

Gold held on to its weaker tone through the mid-European session on Tuesday, albeit has managed to recover a major part of the early lost ground to near two-month lows. Oversold conditions on hourly charts seemed to be the only factor that led some intraday short-covering move amid a modest USD pullback from two-year tops.
However, the prevailing risk-on mood, reinforced by a strong upsurge in the US Treasury bond yields amid growing optimism over a possible resolution of the prolonged US-China trade disputes, might continue to weigh on traditional safe-haven assets and keep a lid on any meaningful recovery for the non-yielding yellow metal.
Moreover, the overnight slide below an important horizontal support near the $1484-83 region – coinciding with 23.6% Fibonacci level of the $1266-$1557 move up – confirmed a bearish head and shoulders pattern breakdown and support prospects for an extension of the recent corrective slide from multi-year tops.
Hence, any further recovery back towards the mentioned support breakpoint, now turned resistance, might still be seen as an opportunity to initiate some fresh bearish positions. The commodity remains vulnerable to slide further towards testing 38.2% Fibo. level support near the $1450-47 region.

Gold daily chart