Gold clings to gains near $1340, remains vulnerable

   •  A subdued USD demand/weaker US bond yields help gains some positive traction. 
   •  Hawkish Fed outlook/easing geopolitical tension might now cap additional gains.

Gold held on to its modest gains and is currently placed at the top end of its daily trading range, around the $1340 region.

A subdued US Dollar price action underpinned demand for dollar-denominated commodities - like gold and helped recover part of the overnight slump back to levels below $1335 level. 

Against the backdrop of Wednesday's hawkish FOMC meeting minutes, receding geopolitical tensions might continue to dent demand for traditional safe-haven assets and keep a lid on any meaningful up-move for the non-yielding yellow metal. 

Meanwhile, a continuous improvement in investors' appetite for riskier assets, as depicted by positive trading sentiment around equity markets, the commodity seems vulnerable to extend this week's sharp retracement slide from YTD highs touched on Wednesday. 

Even from a technical perspective, the yellow metal's inability to close above $1353 level also seems to suggest persistent supply at higher levels. Hence, any up-move might now be looked upon as an opportunity to initiate some fresh short positions.

Technical levels to watch

Immediate support is pegged near $1335 level, below which the slide could get extended even below $1330 area towards retesting $1326-24 strong horizontal support. On the upside, sustained move beyond $1341-42 area could lift the commodity back towards $1353 supply zone, which if cleared might negate any near-term bearish bias and pave the way for an extension of the bullish trajectory.