Gold continued drifting lower through mid-European session on Monday and has now dropped to fresh multi-week lows, just below the very important 200-day SMA.
Today's upbeat Chinese Caixin manufacturing PMI for June eased concerns for a slowdown in the world's second-largest economy and boosted investors' risk appetite. Hence, a fresh wave of global risk-on trade, as depicted by a strong rally in global equity markets, was seen denting the precious metal's safe-haven demand.
Adding to this, a goodish greenback recovery, with the key US Dollar Index moving away from nine-month lows touched on Friday further weighed on dollar-denominated commodities and contributed to the yellow metal's slide to its lowest level since May 16.
With several major central banks around the world, including the Fed, ECB, BoE and BoC, hinting for a tighter monetary policy stance, a rise in global bond yields has been driving flows away from the non-yielding metal and has been driving the commodity lower over the past three trading sessions.
Investors now look forward to the release of latest FOMC meeting minutes on Wednesday, for some clues over the timing of the next Fed rate-hike action, and the keenly watched US monthly jobs report on Friday in order to determine the next leg of directional move for the commodity.
• Market movers for the week ahead - Rabobank
Technical levels to watch
A follow through weakness below $1227 immediate support has the potential to continue dragging the commodity further towards its next support near $1220-18 region en-route the $1200 round figure mark.
On the upside, any recovery attempts might now confront immediate resistance near $1240 region, which if cleared decisively might trigger a short-covering rally back towards 100-day SMA hurdle near $1249 region ahead of $1255 strong resistance.
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