Gold drops to $1326, remains stuck in a trading range

Gold faded its bullish spike to $1338 level during early Asian trading session and turned back lower, erasing Tuesday's tepid gains to currently trade around $1326 region.

Improvement in global risk appetite towards riskier assets continues to dent the safe-haven appeal of the yellow metal. Adding to this, a broadly stronger US Dollar is also seen weighing on dollar-denominated commodities - like gold. 

Moreover, a recent slew of upbeat global economic releases has now subsided fears of a global economic slowdown and is further exerting selling pressure surrounding the precious metal. 

From technical perspective the commodity now seems to sustain its weakness below upward trending 20-day SMA, thus increasing possibilities of a break-down below 4-day trading range and continuation of the commodity's near-term corrective move. 

Technical levels to watch

On a sustained weakness below $1325, the metal seems to head back towards post-Brexit corrective swing lows support near $1305 level, which is closely followed by $1300 psychological mark support. A follow through selling pressure below $1300 handle has the potential to drag it further towards testing 50-day SMA support near $1285 region.

Meanwhile on the upside, $1338-40 area now seems to have emerged as immediate resistance, above which the commodity seems to immediately jump to test resistance near $1350 region. On a decisive trade back above $1350 resistance, the precious metal seems all set to resume its near-term bullish traction and head back towards retesting recent highs resistance near $1375 level.