Gold jumps to session tops, around $1570 region
- Gold regains traction after Iran hints at retaliation.
- Overbought conditions might cap any further gains.
- Traders now eye US ISM PMI for a fresh impetus.
Gold reversed an Asian session dip to the $1555 region and jumped to fresh session tops, around the $1570 area in the last hour.
The precious metal lost some traction on Monday and eased from the highest level in more than six years – touched in the knee-jerk reaction to heightened geopolitical tensions in the Middle East.
US-Iran tensions continue to support gold
The market mood calmed a bit in the absence of any fresh threats from the US or Iran and led to a slight improvement in the risk sentiment, which eventually weighed on the commodity's safe-haven status.
The risk-on flows helped the US Treasury bond yields to stage a goodish rebound, which further dented demand for the non-yielding yellow metal and triggered some profit-taking on the first day of the week
The pullback extended through the Asian session on Tuesday, albeit managed to attract some dip-buying on news that Iran will retaliate against the US killing of Quds Force Commander Qasem Soleimani.
Markets turned a little more cautious on the back of the latest headlines, which turned out to be one of the key factors behind the commodity's latest leg of a sudden spike over the past hour so so.
It, however, remains to be seen if bulls are able to capitalize on the momentum or refrain from placing any aggressive bets amid extremely overbought conditions on the daily chart.
Moving ahead, market participants now look forward to the release of the US ISM Non-Manufacturing PMI, which will influence the USD price dynamics and produce some short-term trading opportunities.
Technical levels to watch