Gold consolidated above $1300 handle, downside seems limited

Gold traded with mild negative bias through early NA session but has still managed to hold its neck above the key $1300 psychological mark.

Following yesterday’s sharp upsurge to nearly 10-month peaks and a subsequent retracement, the precious metal seems to have entered a consolidation phase amid easing geopolitical tensions. 

Also collaborating to the yellow metal's weakness was a follow through US Dollar recovery, which found support from today's stellar ADP report on private sector employment and better-than-expected second estimate of US Q2 GDP growth. A stronger greenback tends to dent demand for dollar-denominated commodities - like gold. 

Further downside, however, remained limited as investors seemed to wait for this week's important release of the keenly watched US nonfarm payrolls data (NFP), which might influence Fed rate hike expectations and eventually provide fresh directional impetus to the non-yielding metal.

Technical levels to watch

Momentum beyond $1313-15 region is likely to could get extended towards $1319 level, above which the commodity is likely to head back towards yesterday’s swing high near the $1325-26 region.

On the downside, weakness below $1305 levels could find some support near the $1300 handle, which if broken could extend the pullback towards $1296-95 support.