Having posted a session high near $1258 region, gold retreated a bit from higher levels and dropped to session lows during early European session on Tuesday.
Currently trading around $1253-52 region, a slight improvement in investors' risk appetite, as depicted by positive opening in the European bourses was seen denting demand for traditional safe-haven assets and weighing on the precious metal.
Against the backdrop of recent upsurge to one-month highs, the pull-back would still be considered as corrective in nature and is likely to be short-lived amid persistent US Dollar selling bias that might continue to lend support to dollar-denominated commodities - like gold.
Meanwhile, the yellow metal has been able to hold its neck above the $1250 important level as market participants look forward to the FOMC announcement on Wednesday. Investors would keenly scrutinize the accompanying monetary policy statement in order to gain some fresh insight over the timing of next Fed rate hike action in 2017, which would eventually help determine the near-term trajectory for the non-yielding metal.
In the meantime, today's release of CB Consumer Confidence Index from the US would be looked upon for short-term momentum play ahead of this week's key event risk on Wednesday.
Technical levels to watch
Dips below $1250 level are likely to find some fresh buying interest at 100-day SMA support near $1247 region, below which the commodity could extend the corrective slide towards $1241 horizontal support. On the flip side, $1257 level now seems to have emerged as an immediate strong hurdle, which if cleared should accelerate the up-move towards $1265-67 horizontal resistance with some intermediate resistance near $1262 level.
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