Gold posts tepid recovery gains as USD retreats

Gold staged a tepid recovery amid US Dollar retracement from multi-year highs, albeit remained closer to over 5-month low touched on Monday.

Currently hovering around session high level near $1228-29 region, weaker greenback is supporting demand for dollar-denominated commodities - like gold. The overall US Dollar Index, which measures greenback's performance against six major currencies, witnessed a brief pause in the post-election rally and is retracing after hitting the highest level in over 13-years in the previous session. 

Meanwhile, the prevalent cautious sentiment around equity markets is further boosting the yellow metal's safe-haven demand and supporting the ongoing recovery move.

Looking at the broader picture, increasing prospects of an eventual December Fed rate-hike action is driving flows away from non-yielding the precious metal, which remains far from any meaningful near-term recovery. 

Today's US macro releases, US CPI print, housing data (building permits and housing starts) and Philly Fed Manufacturing Index, along with the Fed Chair Janet Yellen's testimony would be looked upon for fresh clues over the next Fed monetary policy action and would eventually help investors to the near-term trajectory for gold prices.

Technical levels to watch

Immediate support is pegged at $1220 below which the metal is likely to head back towards Monday's low support near $1210 region before sliding further towards the very important $1200 psychological mark. On the upside, $1230-32 level (yesterday's high) now becomes immediate barrier, which if cleared should lift the commodity immediately towards $1240 en-route its next major resistance near $1250 area.

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