Gold surrenders daily gains, back around $1260 level

Gold reversed all of its early gains to three-day tops near $1264 region and is now on the brink of breaking into negative territory.

The precious metal's latest leg of retracement from higher levels could be attributed to improving investors' appetite for riskier-assets, as depicted by buoyant sentiment around equity markets. After an initial reaction to the tragic terrorist attack in the city of Manchester, a turnaround in market risk sentiment was seen weighing on the yellow metal's safe-haven appeal.

Adding to this, a modest greenback recovery, with the key US Dollar Index reversing early losses to six month lows, further dented demand for dollar-denominated commodities and collaborated to commodity's slide over the past couple of hours. 

Given that the incoming US economic data is unlikely to prevent the Fed from raising rates in June, market participants would eagerly await for clues over the timing and number of future Fed rate-hike moves. Hence, speeches from several FOMC members would now be looked upon for some fresh impetus ahead of the key Fed monetary policy meeting minutes, due for release during the NY session on Wednesday.

   •  Fed to raise rates in June – Lloyds Bank

Technical levels to watch

A follow through retracement below $1258 level (session lows), leading to a subsequent drop below $1255 support, is likely to drag the metal back towards retesting the very important 200-day SMA support around $1245 region with some intermediate support near $1250 area.

On the upside, $1264-65 region remains immediate strong hurdle, which if conquered now seems to accelerate the up-move towards $1269-70 intermediate resistance ahead of $1276-78 important barrier.