Gold holds steady near 6-week highs, above $1260 level

Gold trimmed of the early gains to a six-week high and retreated to the $1262 region during early the European session, albeit has managed to hold with some minor gains. 

Following its two-day policy meeting, the Fed held interest rates steady and reiterated its intention to start shrinking its massive balance sheet, albeit sounded more cautious on the inflation outlook. The perceived dovish policy statement weakened the US Dollar across the board and boosted demand for dollar-denominated commodities - like gold. 

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This coupled with a sharp pullback in the US Treasury bond yields further benefitted the non-yielding metal and collaborated to its strong up-move on Wednesday. The yellow metal extended the momentum through Asian session on Wednesday and jumped to its highest level since mid-June. 

A modest greenback recovery, supported by a pickup in the US bond yields kept a lid on the bullish trajectory. Meanwhile, a mildly weaker opening in the European equity markets supported safe-haven demand and helped the commodity to hold with minor gains. 

Later during the NA session, the US economic data - durable goods orders, goods trade balance data and initial jobless claims, would now be looked upon for some fresh trading impetus ahead of the US growth numbers on Friday.

Technical levels to watch

Immediate resistance is pegged near $1265-66 region, above which the metal is likely to dart towards $1280 horizontal hurdle with some intermediate resistance near $1270 level. 

On the flip side, any pullback below $1260 level now seems to find immediate support near $1255-54 area, which if broken could drag the commodity back towards 100-day SMA support near $1249 region.