Gold retreats from 1-1/2 week tops, back below $1320 level

   •  A modest USD rebound prompts some fresh selling.
   •  Retracing US bond yields help limit deeper losses.

Gold traded with a mild negative bias on Friday and eroded a part of previous session's strong gains to 1-1/2 week tops. 

The commodity struggled to build on overnight strong gains and is now retracing from the $1322-23 immediate support zone. A modest pickup in the US Dollar demand could be one of the key factors prompting some fresh selling around dollar-denominated commodities - like gold.

This coupled with the prevalent risk-on mood was seen weighing on traditional safe-haven assets and further collaborated to the precious metal's weaker tone through the early European session.

Meanwhile, investors still assessed the implication of Thursday's softer CPI print on the pace of Fed rate hikes, with a follow-through retracement in the US Treasury bond yields helping limit any deeper losses for the non-yielding yellow metal, at least for the time being.

Looking at the broader picture, the commodity has been finding decent support near the very important 200-day SMA and hence, a subsequent move beyond 100-day SMA hurdle, currently near the $1325 region, would confirm that a near-term bottom is already in place and thus, pave the way for an extension of the near-term upward trajectory.

Technical levels to watch

Any subsequent retracement is likely to find support near the $1315-14 region and is followed by $1310 support area, which if broken could drag the metal back toward 200-DMA support, currently near the $1306 region.

On the flip side, bullish momentum is likely to confront resistance at 100-DMA, around the $1326 region, above which the commodity seems all set to aim towards challenging $1331-33 supply zone.