Gold sticks to daily gains, above $1335 level

Gold now seems to have entered a bullish consolidation phase and was seem oscillating in a narrow range, above $1335 level.

Spot prices edged higher on Tuesday and held on to its modest gains through the mid-European session, shrugging off a modest US Dollar rebound and a deal to end the partial US government shutdown. 

A sharp retracement in the US Treasury bond yields turned out to be the only factor underpinning demand for the non-yielding yellow metal. However, the prevalent risk-on mood, as depicted by strong gains across European equity markets, was seen denting the precious metal's safe-haven appeal and capped additional gains. 

Meanwhile, concern over highly stretched equity valuations was now seen driving flows towards the commodity, as a possible hedge against any near-term pull-back, which might now contribute towards limiting any immediate sharp downside. 

In absence of any major market moving economic release, the metal seems more likely to extend its consolidative price action and wait for this week's important US macro data for some fresh directional impetus.

Technical levels to watch

Immediate support is pegged near the $1332-31 region, which if broken might drag the commodity back towards $1326 horizontal support. On the upside, the $1338-40 region might continue to act as an immediate hurdle, above which the metal is likely to aim towards testing $1350 resistance area.