Gold surrenders majority of early recovery gains

   •  Retreats back closer to 5-month lows.
   •  Fading safe-haven demand/positive US bond yields capping gains.
   •  FOMC statement could help determine the next directional move.

Gold surrendered majority of its early recovery gains and has now retreated back closer to near 5-month lows touched in the previous session. 

A modest US Dollar retracement provided an initial boost to dollar-denominated commodities - like gold. However, an uptick in European equity markets, pointing to improving investors’ risk-appetite and which tends to weigh on traditional safe-haven assets, failed to lend any additional support to the precious metal's recovery move. 

Moreover, a goodish pickup in the US Treasury bond yields, amid market conviction over an eventual Fed rate hike move on Wednesday, further collaborated towards keeping a lid on any meaningful recovery for the non-yielding yellow metal.

Apart from the FOMC decision, investors would keenly scrutinize the accompanying statement for clues over the central bank's near-term monetary policy outlook in order to determine the commodity's next leg of directional move.

Technical levels to watch

Bears would be eyeing for a decisive breakthrough $1240 level, below which the metal is likely to accelerate the slide towards $1235 support before eventually dropping to the $1228-29 region.

On the upside, any recovery attempts beyond $1246 level (session tops) might now confront fresh supply near the $1251-52 region, which if cleared might trigger a short-covering bounce towards $1258 resistance.