Gold stages a goodish recovery from 5-week lows

Gold snapped five consecutive days of losing streak and staged a goodish recovery from five week lows touched in the previous session.

Currently trading around $1245-46 region, the precious benefitted from a fresh wave of global risk-aversion trade, which tends to boost demand for traditional safe-haven assets. Moreover, a mildly softer tone surrounding the US Dollar was also seen extending support to the dollar-denominated commodity and collaborated to the metal's recovery move 

It, however, remains to be seen if the yellow metal is able to build on the recovery move amid growing expectations for additional Fed rate-hike action by the end of 2017, led by upbeat comments from various FOMC members. 

Despite of the recent US data disappointment, which has failed to show consistent US economic growth, prospects of higher interest rates in the US has been one of the key factors that has dampened investors’ appetite for the non-yielding commodity and could thus, limit any immediate swift recovery. 

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From a technical perspective, the metal has decisively broken below 100-day SMA support. Hence, a follow through weakness below the very important 200-day SMA would reinforce near-term bearish bias and turn it vulnerable to extend the ongoing slide from $1300 neighborhood touched earlier this month.

Technical levels to watch

The 100-day SMA near $1248 region is likely to act as immediate resistance, above which a bout of short-covering has the potential to lift the metal towards $1254 horizontal resistance en-route the next major hurdle near $1260 level. 

On the downside, weakness back below $1242 level is likely to accelerate the slide towards 200-day SMA support near $1238 region, which if broken is likely to pave way for continuation of the metal's downward trajectory towards $1227-25 strong horizontal support.