Gold clings to gains near $1310 level, upside seems capped

   •  A modest USD retracement once again helps bounce off 200-DMA.
   •  Reviving safe-haven demand provides an additional boost. 
   •  US ISM PMI eyed for some impetus ahead of Friday’s NFP.

Gold held on to its modest recovery gains through the early European session but was now seen struggling to build on its early up-move further beyond the $1310 level.

The US Dollar retreated from 4-month tops after the latest FOMC monetary policy update failed to impress bulls and prompted some short-covering move around dollar-denominated commodities - like gold. 

Adding to this, the prevalent cautious sentiment around global equity markets, ahead of the US-China bilateral trade talks, further underpinned demand for traditional safe-haven assets and remained supportive of the precious metal's rebound from the very important 200-day SMA.

Further gains, however, remained capped as investors still seemed convinced that the Fed would eventually opt for a steeper monetary policy tightening cycle, which might eventually dent demand for the non-yielding yellow metal.

Traders now look forward to the release of US ISM non-manufacturing PMI, due later during the early NA session, for some fresh impetus. However, investors are likely to wait for Friday's keenly watched NFP report before positioning for the commodity's next leg of directional move.

Technical levels to watch

Any subsequent recovery move is likely to confront resistance near the $1315-16 region, above which a fresh bout of short-covering could lift the metal back towards $1323-25 supply zone. On the flip side, the $1305-03 region (200-day SMA) might continue to act as an immediate support, which if broken might turn the commodity vulnerable to break below the $1300 round figure mark and head towards testing its next major support near the $1293 horizontal zone.