Gold slips below $1340, N. Korean factor to limit immediate downside

Gold was seen consolidating recent rally to a nearly one-year and traded with slight negative bias through early European session on Wednesday.

Global flight to safety, on rising geopolitical tensions between the US and N. Korea has been underpinning the precious metal. This coupled with persistent US Dollar weakness was seen as another supporting factor for the near-term rally for dollar-denominated commodities - like gold. 

Meanwhile, Tuesday comments from various Fed officials casted doubts over possibilities of any additional rate hike action by the end of this year and was also seen benefitting the non-yielding yellow metal.

However, a modest greenback recovery, backed by an uptick in the US Treasury bond yields kept a lid on any further up-move, with the commodity entering a consolidation phase on Wednesday amid near-term overbought conditions. 

Today's US economic docket features the release of ISM non-manufacturing PMI and would now be looked upon for some trading impetus later during the NA session. In the meantime, broader market risk sentiment and the USD price dynamics would continue to act as key determinants of the metal's movement.

Technical levels to watch

Currently trading around $1337 level, immediate support is pegged near $1334 area, below which the metal could correct back towards $1326-24 support area. On the upside, sustained momentum beyond $1340 level now seems to pave way for continuation of the commodity's up-move towards its next hurdle near the $1350 region.