Gold climbs back closer to 200-DMA on weaker USD

   •  The ongoing USD retracement underpins the dollar-denominated commodity. 
   •  Risk-on mood/rising US bond yields might keep a lid on any strong up-move.

Gold edged higher on Thursday and moved back to the top end of its weekly trading range, around the $1305-06 region. 

The precious metal extended this week's rebound from $1293 area and gained some positive traction for the third consecutive session. The ongoing US Dollar retracement from 6-1/2 month tops was seen as one of the key factors underpinning demand for dollar-denominated commodities - like gold. 

Adding to this, concerns about a full-blown US-China trade war, especially after the White House said to continue to pursue action on some $50 billion worth of Chinese goods, further supported the precious metal's safe-haven appeal. 

The positive factors, to some extent, were negated by easing political crisis in Italy - the Euro-zone's third-largest economy and reviving investors' appetite for riskier assets - like equities. 

This coupled with some renewed pickup in the US Treasury bond yields might further collaborate towards keeping a lid on any further strong up-move for the non-yielding yellow metal. 

Hence, it would be prudent to wait for a strong follow-through move beyond the very important 200-day SMA before anticipating any further near-term up-move for the commodity. 

Technical levels to watch

Immediate resistance remains near the $1307-08 region (200-DMA), above which the metal seems all set to test $1314-15 supply zone before eventually darting towards its next major hurdle near the $1321-23 region.

On the flip side, the $1300 handle now seems to protect the immediate downside, which if broken could drag the commodity back towards $1295 horizontal support en-route the $1290 region.