Gold retraces from session high, holding marginal gains at $1260

Having posted a session high closer to Friday's peak level near $1265, Gold trimmed its early gains and has now retraced back below the very important 200-day SMA.

Currently trading around $1260 level, a broadly stronger greenback is weighing on dollar-denominated commodities - like gold. Moreover, upbeat investor sentiment, as depicted by a minor strength in European equities, is further denting the safe-haven demand and capping any swift recovery for the precious metal.

During early Asian session on Monday, the yellow metal witnessed a tepid recovery bounce as improvement in Donald Trump's performance during the second presidential debate between curbed investor risk-appetite and extended support to traditional safe-haven assets. 

The recovery momentum, however, seems to be turning short-lived as the US Dollar continues to be underpinned by increasing prospects of an eventual Fed rate-hike action by the end of this year and is hence, weighing on non-yielding commodity, gold. 

With a scheduled bank holiday in the US, the yellow metal would continue to derive its momentum from the US Dollar price-dynamics and prevalent risk sentiment around equity markets.

Technical levels to watch

From current levels, $1255 seems to act as immediate support, which if broken could drag the commodity back below $1250 level towards Friday's swing low support near $1240 area.

Meanwhile on the upside, $1265 level (session high) now becomes immediate resistance above which the recovery momentum is likely to get extended towards $1275-77 horizontal resistance before the commodity eventually rises to the very important $1300 psychological mark.