Gold extends slow recovery to $1220, lacks conviction

Gold inched higher through Asian session on Wednesday and extended its modest recovery move from multi-month lows touched at the start of this week. 

Currently trading around $1218 level, off session highs touched in the past hour, the precious metal traded with a mild positive bias for the third consecutive session and was seen benefitting from safe-haven demand led by the latest political drama in the US. 

Political uncertainty in the US was also seen taking a toll on the US Dollar and further boosted demand for dollar-denominated commodities - like gold.

It, however, has been a rather slow recovery as investors lacked conviction amid growing prospects of tighter monetary policy stance from major central banks, which supported the recent rally in global bond yields and kept a lid on any meaningful recovery for the non-yielding yellow metal.

Investors now look forward to the Fed Chair Janet Yellen's two-day semiannual testimony on monetary policy outlook, starting today, and important US macro data - inflation and retail sales, due on Friday, in order to determine the next leg of directional move for the commodity.

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Technical levels to watch

A strong follow through buying interest has the potential to continue lifting the metal towards $1228-29 strong supply zone en-route the very important 200-day SMA strong hurdle near $1232 region. On the flip side, $1214-13 region now becomes an immediate support to defend, which if broken would turn the commodity vulnerable to head back towards multi-month lows support near $1205 region ahead of the $1200 round figure mark.