Gold clings to tepid recovery gains, lacks strong follow through momentum

Gold held on to its tepid recovery gains through early NA session but seemed lacking any strong follow through momentum amid subdued trading action on Tuesday.

On Tuesday, the precious metal benefitted from safe-haven demand after North Korea fired an intercontinental ballistic missile, which eased investors' appetite for riskier assets. 

Currently placed near the top end of the daily trading range, around $1225 region, the yellow metal has managed to partially recover some of its Monday's sell-off but the up-move lacked conviction amid the continuous upsurge in the US Treasury bond yields. 

On Monday, the US bond yields rose further after US ISM manufacturing PMI and weighed heavily on the non-yielding commodity. This coupled with stronger US Dollar further dented demand for dollar-denominated commodities and collaborated to the metal's slump to the lowest level in nearly 8-weeks.

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It, however, remains to be seen if the metal is able to build on the recovery move amid thinner trading activity on Tuesday due to the Independence Day holiday in the US. 

Technical levels to watch

A strong follow through buying interest has the potential to lift the metal back towards the very important 200-day SMA resistance near $1234 region, with some intermediate hurdle near $1230-31 area.

On the flip side, weakness back below $1220 level would turn the commodity to break below May monthly lows support near $1213 level and aim towards testing the $1200 handle.