Gold corrects further, weighed down by strong USD recovery and risk-on mood

Gold finally broke down of its daily consolidative range and refreshed session lows during early NA session.

Following last week's slump to 33-month lows, the US Dollar staged a smart recovery on Monday and had been one of the key factors weighing on dollar-denominated commodities - like gold. 

Meanwhile, the market breathe a sigh of relief that North Korea did not launch yet another nuclear missile test over the weekend and the damage from Hurricane Irma did not appear to be catastrophic. Hence, fading risk-aversion trade triggered a rally across global equity markets and further dented the precious metal's safe-haven appeal. 

The risk-on environment was further reinforced by a sharp spike in the US Treasury bond yields, which was also seen collaborating towards driving flows away from the non-yielding metal. 

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Looking at the broader picture, today's fall would still be categorized as a corrective in nature and might be bought into amid growing doubts over the Fed's ability to deliver a third rate hike by the end of this year. 

Technical levels to watch

A follow through weakness below $1330 level is likely to accelerate the slide towards $1325 horizontal level en-route $1314-13 strong support. On the upside, $1340 level now seems to act as immediate hurdle, above which the metal is likely to make a fresh attempt to move back above $1350 barrier and retest Friday's swing high resistance near $1357 level.