After a brief jump to nearly 14-month highs around $1,348, gold prices started to correct lower as the bullion attracted some profit-taking at interesting levels. On Tuesday, the precious metal is challenging the $1,324 barrier, a break of which could open the way towards the $1,320 support area.
The recent aggressive rally in gold prices was driven by rising expectations of a rate hike by the Federal Reserve. By the way, some market participants are pricing in monetary policy easing during the meeting scheduled for next week. Such expectations are looking too dovish and this is a risk for the bullion as should the central bank refrain from cutting rates next Wednesday, the greenback may rise decently, while the yellow metal will further lose ground in this scenario.
In the short term, meanwhile, the downside looks fairly contained due to the lingering uncertainty over the US-China trade dispute and some fears of slowing global growth. Technically, gold needs to hold above the $1,300 threshold in order to avoid a more aggressive bearish correction.