Gold reverses an early dip to $1218 support area amid weaker USD

   •  Renewed USD weakness helps to bounce off an important horizontal support.
   •  Reviving safe-haven demand provides an additional boost and remains supportive.
   •  Pickup in the US bond yields/Fed rate hike prospects might cap any further up-move.

Gold extended its steady climb from an intraday low level of $1219 and is currently placed at the top end of its daily trading range.

The US Dollar held on the defensive at the start of a new trading week and was seen as one of the key factors extending some support to the dollar-denominated commodity. Friday's headline Q2 GDP print showed a solid pace of economic growth, albeit failed to impress market participants, anticipating even stronger growth, and exerted some downward pressure on the greenback. 

This coupled with the prevalent cautious mood across European equity markets underpinned demand for traditional safe-haven assets and provided an additional boost to the precious metal's rebound from the vicinity of an important horizontal support near the $1218 level. 

It, however, remains to be seen if bulls are able to build on the positive momentum or the uptick is being sold into amid some renewed pickup in the US Treasury bond yields and Fed rate hike prospects, which tend to drive flows away from the non-yielding yellow metal. 

Technical levels to watch

Any subsequent up-move beyond $1227 level is likely to get extended towards $1231-32 horizontal resistance en-route $1235 supply zone. On the flip side, $1218-17 area might continue to protect the immediate downside, which if broken might expose YTD lows, around the $1212-11 region.