Gold falls to seven-week lows amid risk-on mood and stronger USD

After an initial uptick, gold turned lower for the third consecutive session and slipped below $1270 level to fresh 7-week lows.

The prevalent bullish sentiment around the US Dollar, which got an additional boost from Monday's upbeat US ISM manufacturing PMI, has been one of the key factors weighing on dollar-denominated commodities - like gold.

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Adding to this, a fresh wave of global risk-on trade, with major US equity indices closing at record high level on Monday and driving Asian markets higher on Tuesday, was also seen denting the precious metal's safe-haven appeal.

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Meanwhile, investors seemed to have largely ignored an uptick in Euro-zone political uncertainty, with renewed optimism over the US President Donald Trump's tax reform plans and expectations for a Fed rate hike move by the year-end continued driving flows away from the non-yielding yellow metal. 

From a technical perspective, Monday's break below 100-day SMA might have triggered a follow through technical selling and seems to have collaborated to the commodity's fall to its lowest level since mid-August.

Later during the NA session, the Fed Governor Jerome Powell's comments, at an event in Washington DC, would now be looked upon to grab some short-term trading opportunities.

Technical levels to watch

Immediate support is pegged near $1268-67 area, below which the metal is likely to accelerate the slide towards $1263 level en-route $1259-58 support. On the upside, the $1272-73 region (100-day SMA) now becomes immediate resistance, which if cleared might trigger a short-covering bounce towards $1279-80 hurdle.