Gold continued gaining ground for the third consecutive session and spiked to fresh two-week highs near $1239 region during Asian session on Tuesday, albeit retreated a bit thereafter.
Growing doubts over the US President Donald Trump's ability to push through pro-growth reforms, after the Senate Republicans rejected Trump’s Healthcare bill yet again, weighed heavily on the US Dollar and was seen benefitting dollar-denominated commodities - like gold.
• Senate Republicans reject Trump's health care bill
Adding to this, a fresh wave of risk-aversion trade, as depicted by losses across global equity markets, provided an additional boost to traditional safe-haven assets and collaborated to the yellow metal's uptick to the highest level since July 3.
Against the backdrop of recent soft data and last week's perceived dovish testimony by the Fed Chair Janet Yellen, fading prospects of additional Fed rate hike moves in 2017, further reinforced by the ongoing slump in the US Treasury bond yields were also seen driving flows towards the non-yielding metal.
• Fed: Markets doubt about commitment to raise interest rates - BBH
A follow through buying interest beyond the technically important 200-day SMA hurdle near the $1,230 region adds to credence that the commodity might have bottomed out in the near-term. Hence, an extension of the commodity's recovery move from near 4-month lows, touched last week, now seems a distinct possibility.
Technical levels to watch
Momentum above $1240 level could get extended towards 100-day SMA resistance near $1246-47 region, above which a fresh bout of short-covering could lift the metal back towards $1257-58 strong horizontal hurdle.
On the flip side, 200-day SMA near $1230 region now becomes an immediate support to defend, which if broken would turn the metal vulnerable to head back towards $1220 support.
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