Gold retreats back to $1316 on notable USD strength

   •  Strong USD recovery prompts profit taking.
   •  Further weighed down by risk-on mood/positive US bond yields.

Gold traded with a mild negative bias for the second consecutive session on Monday and retreated further below a 3-1/2 month peak touched last week.

The post-NFP US Dollar recovery kept exerting some downward pressure around dollar-denominated commodities - like gold. Moreover, a follow-through uptick in the US Treasury bond yields, supported by March Fed rate hike expectations, was also seen driving flows away from the non-yielding metal.

Meanwhile, the prevailing strong bullish sentiment around global equity markets did little to revive demand for traditional safe-haven assets and stall the precious metal's slide back closer to Friday's low support near the $1315 region.

Moving ahead, this week's important US macro releases, especially the latest inflation figures, would influence Fed rate hike expectations and eventually provide some fresh impetus. In the meantime, the USD/US bond yield dynamics would remain key determinants of the commodity's momentum. 

Technical levels to watch

Immediate support remains near $1312 level, which if broken could drag the commodity back towards $1306-05 intermediate support ahead of the $1300 handle. On the upside, $1322-23 area might continue to act as an immediate hurdle, above which the metal could accelerate the up-move towards the $1238-29 region en-route $1332-34 supply zone.