Gold surges to 3-1/2 month tops, around $1335 level

   •  Increasing Fed rate cut bets continues to benefit the non-yielding commodity.
   •  The prevailing USD selling bias provides an additional boost amid cautious mood.
   •  Investors now look forward to a duo of US economic reports for a fresh impetus.

Gold finally broke out of its Asian session consolidation phase and spiked to near 3-1/2 month tops, around the $1335 level in the last hour.

After yesterday's two-way price action, buying interest around the precious metal picked up the pace on Wednesday in wake of firming expectations that the Fed will eventually cut interest rates in the face of escalating US-China trade tensions.

The Fed Chair Jerome Powell, in a speech on Tuesday, hinted at the possibility of an interest rate cut and said that the central bank will do what it takes to sustain the expansion of the US economy, which was seen benefitting the non-yielding yellow metal.

Meanwhile, the US Dollar struggled near multi-week lows, just below the 97.00 handle, amid some renewed weakness in the US Treasury bond yields and remained supportive of the strong bid tone surrounding the dollar-denominated commodity.

Adding to this, the prevailing cautions mood around equity markets further underpinned the precious metal's relative safe-haven status and contributed to the ongoing positive momentum through the early European session, to the highest level since February 21.

Moving ahead, Wednesday's US economic docket highlights the release of ADP report on private sector employment and the ISM non-manufacturing PMI, which will now be looked upon to grab some short-term trading opportunities.

Technical levels to watch