Gold regains traction, inching back closer to $1340 level

Gold regained some fresh traction on Thursday and recovered part of previous session's modest pull-back from nearly one year tops. 

On Wednesday, the precious metal snapped four consecutive days of winning streak and corrected to $1330 neighborhood after the US lawmakers and the White House agreed to extend the US debt limit for around three-months to mid-December. This coupled with a goodish recovery in stocks further dented the yellow metal's safe-haven appeal and prompted traders to take some profits off the table.

   •  US: Fiscal uncertainty shifts to December – Nomura

The commodity rebounded back to $1338 level during early European session on Thursday and was being supported by a mildly softer tone surrounding the US Dollar. A weaker greenback tends to benefit dollar-denominated commodities - like gold. 

Investors now brace for the highly anticipated ECB monetary policy decision, where clues over a possible shift away from the central bank's ultra-lose monetary policy could trigger a fresh bout of volatility in the markets and could benefit the commodity. 

   •  ECB: Poor risk/reward to pre-position for an outcome - TDS

Meanwhile, increasing odd for further escalation of geopolitical tensions, with N. Korea reportedly preparing to launch a new intercontinental ballistic missile, might continue to limit any immediate sharp downside for the metal. 

   •  Russia’s Putin: Counter-productive to whip up military hysteria over N. Korea

Technical levels to watch

On a sustained move back above $1340 level, the metal seems to dart towards its next major hurdle near the $1350 region. On the downside, $1331-30 area seems to have emerged as immediate support, which if broken could drag the commodity towards $1326-24 support area.