Gold surrenders daily gains to hit fresh multi-week lows

Gold surrendered all of its early tepid recovery gains and drifted into negative territory to hit fresh four-week lows near $1240 region.

The commodity turned lower for the sixth consecutive session and the latest leg of slide over the past couple of hours could be attributed to a modest recovery in European equity markets, which was seen weighing on the precious metal's safe-haven appeal.

Adding to this, a sharp rebound in the US Treasury bond yields, backed by growing prospects of additional Fed rate-hike action by the end of this year, further drove investors away from the non-yielding metal. 

However, a mildly softer tone surrounding the US Dollar extended some support to the dollar-denominated commodity and might help limit further losses, at least for the time being.

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From a technical perspective, the commodity is reversing from an important support now turned resistance near 100-day SMA. Hence, a follow through weakness below the very important 200-day SMA now seems to pave way for continuation of the metal's corrective slide from $1300 neighborhood touched at the beginning of this month.

Technical levels to watch

Weakness below $1240 level is likely to find strong support near $1238 region (200-day SMA), below which the metal seems all set to head towards testing $1227 support area. On the upside, any recovery attempts might continue to confront immediate resistance at 100-day SMA, near $1248 region, which if cleared is likely to trigger a short-covering bounce towards $1253-55 region en-route $1260 hurdle.