Gold spikes back closer to 200-DMA important hurdle

Gold continued gaining traction for the third consecutive session and spiked to one week high during early European session on Tuesday.

The prevalent risk-off mood, as depicted by negative trading sentiment around global financial markets, was seen boosting the precious metal's safe-haven appeal. Moreover, cautious sentiment ahead of this week's meeting between the US President Donald Trump and China's President Xi Jinping further collaborated towards driving flows towards the perceived safe-haven assets, including gold. 

The metal even shrugged-off of a mildly positive sentiment surrounding the US Dollar, which tends to dent demand for dollar-denominated commodities - like gold. Also on Monday, the metal recovered early lost ground and build on Friday's recovery move from 1-1/2 week low after the US ISM manufacturing PMI retreated from a 2-1/2 year high in March. The data reaffirmed the view that the Federal Reserve is unlikely to opt for aggressive rate-tightening cycle, which eventually extended support to the non-yielding yellow meal.

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With today's gains, the commodity has now moved back closer to the very important 200-day SMA strong hurdle. Since Feb., the metal has made couple of time attempts to move past the 200-day SMA and hence, it would be prudent to wait for a decisive break through this important barrier before confirming the near-term bullish trajectory.

Technical levels to watch

A sustained strength above $1259-60 hurdle (200-day SMA) now seems to pave way for continuation of the near-term up-move towards testing next major hurdle near $1275 region, with some intermediate resistance near $1265-67 area.

On the flip side, $1253-52 zone now becomes immediate support to defend, which if broken is likely to accelerate the slide towards $1250 support before the commodity eventually heads towards retesting $1245-43 strong horizontal support.