Gold retreats from 5-week tops amid a modest USD rebound

   •  A follow-through USD recovery prompts some long-unwinding trade.
   •  Risk-off mood/sliding US bond yields likely to help limit any sharp fall. 

Gold extended its steady decline through the early European trading session and eroded a major part of the previous session's strong up-move to five-week tops.

The US Dollar built on its modest rebound and turned out to be one of the key factors prompting some fresh selling around the dollar-denominated commodity, albeit a combination of factors helped limit deeper losses.

The prevalent risk-off mood, especially after the overnight slump of over 3% in US stocks, was seen extending some support to the precious metal's perceived safe-haven status. 

Adding to this, speculations of a pause in the Fed's rate hike cycle in 2019, reinforced by a continuous slide in the US Treasury bond yields further collaborated towards limiting any sharp slide for the non-yielding yellow metal.

Hence, it would be prudent to wait for a strong follow-through selling, amid absent relevant market moving economic releases, before confirming that the commodity might have already topped out in the near-term.

Technical levels to watch

Any subsequent fall is likely to find support near the $1230 level, below which the corrective slide could further get extended towards the $1225-23 horizontal support. On the flip side, the $1238-39 region now seems to act as an immediate resistance, which if cleared might lift the commodity further towards Oct. monthly highs, around the $1243-44 zone.