Gold rebounds from fresh one-month lows, recoveries likely to be short-lived

Gold has managed to recover majority of its early lost ground to fresh one month lows and is currently placed in neutral territory, just above $1280 level.

The precious metal extended its corrective slide from yearly tops, touched earlier this month, and dropped to its lowest level since August 25. Against the backdrop of fading safe-haven demand, growing conviction for a Fed rate hike move in December continued driving flows away from the non-yielding commodity. 

This coupled with the prevalent bullish sentiment surrounding the US Dollar, which got an additional boost after the US President Donald Trump proposed the biggest US tax overhaul in three decades, exerted additional pressure on dollar-denominated commodities - like gold.

   •  US tax plan: Significant cut in personal and corporate tax rates - Westpac

Ahead of today's important release of the final US GDP print for Q2 2017, the USD bulls seemed taking a breather and helped the commodity to bounce off lows. 

   •  Atlanta Fed: GDPNow model forecast for real GDP growth revised lower to 2.1%

However, continuous upsurge in the US Treasury bond yields might continue to keep a lid on any further up-move, with any meaningful bounce running the risk of being sold into.

Technical levels to watch

Subsequent recovery beyond $1284-85 area could get extended towards $1290 level, above which a bout of short-covering could lift the commodity back towards the $1300 handle.

On the flip side, the $1278-76 region remains immediate support to defend, which if broken is likely to accelerate the slide towards $1271 level ahead of its next support near $1263-62 zone.