Gold clings to gains near $1345 level, focus remain on FOMC

   •  Persistent USD selling helps regain some positive traction. 
   •  Weaker US bond yields provide an additional boost.
   •  Focus remains on the key FOMC announcement. 

Gold edged up on Wednesday and rose to a session high level of $1,345 per ounce, recovering over $10 from previous session's one-week low. 

Persistent selling bias surrounding the US Dollar, which had a rather muted reaction to the US President Donald Trump’s first State of the Union address, was seen as one of the key factors underpinning demand for dollar-denominated commodities - like gold.

Adding to this, a follow-through retracement in the US Treasury bond yields, pointing to deteriorating investors' appetite for riskier assets, as depicted by a weaker trading sentiment around equity markets, provided an additional boost to the precious metal's safe-haven appeal. 

The uptick, however, seemed lacking any strong follow-through momentum as investors await the outcome of a two-day FOMC meeting. With a March Fed rate hike move nearly priced in the markets, only a hawkish shift, indicating a faster pace of hikes through 2018 would pose a major risk for the non-yielding yellow metal. 

Ahead of the key event risk, the release of ADP report on the US private sector employment would help traders grab some short-term trading opportunities. 

Technical levels to watch

Immediate resistance is pegged near the $1349-50 region, above which the up-move could get extended back towards $1358 supply zone. On the flip side, $1337 level now seems to protect the immediate downside, which if broken is likely to accelerate the corrective slide further towards the $1326-25 important support.