Gold back below $1140 as US bond yields jump

Gold faded a bullish spike to $1150 level and reversed around $10 from nearly two-week high touched during early European session. 

Currently trading back below $1140 level, the precious metal staged a goodish recovery on Tuesday after recording a seventh straight weekly decline. The recovery, however, ran out of steam amid resurgent US Dollar buying interest, which tends to dent demand for dollar-denominated commodities, including gold. 

Moreover, renewed weakness in the US government bonds across the board, pushing treasury yields sharply higher, is further weighing on the non-yielding yellow metal. The 2-year yield, which closely tracks market expectations of the Fed's monetary policy stance, rose to 1.227% (gaining 1.7% for the day).

Next on tap would be the Conference Board's consumer confidence index and might provide some impetus for short-term traders. Meanwhile, thin trading volumes in the final week of the year, amid lighter economic calendar, could aggravate the effect of a big buy/sell order and lead to sharp moves in either direction. 

Technical levels to watch

From current levels, $1135 level is likely to act as immediate support below which the slide could get extended towards $1130-28 support area. A follow through selling pressure is likely to turn the metal vulnerable to drift further towards $1110 support area, en-route $1100 psychological mark. 

On the upside, $1150 level now becomes immediate hurdle, which if conquered might trigger a short-covering rally towards $1160 horizontal support ahead of the next major resistance near $1170 region.