Gold weaker around $1280, further downside seems limited ahead of French polls

Gold came under some fresh selling pressure on Friday and has now reversed previous session's tepid up-move, to currently trade marginally below $1280 level.

With geopolitical tensions taking the backseat, improving investors’ appetite for riskier assets - like equities, was seen denting demand for traditional safe-haven assets and failed to assist the precious metal to build on yesterday's recovery move from closer to weekly lows. 

Meanwhile, against the backdrop of renewed optimism around the US President Donald Trump's pro-growth economic policies following overnight comments by the US Treasury Secretary Mnuchin, a mildly positive tone around the greenback, with the key US Dollar Index moving away from three-week lows touched yesterday, further weighed on dollar-denominated commodities - like gold.

Looking at the larger picture, nervousness ahead of the crucial French President election might continue to limit any further sharp downslide as a surprise outcome would trigger a fresh bout of volatility across global financial markets and drive investors back towards traditional safe-haven assets, including gold. 

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With the scheduled release of flash PMI prints and existing home sales data, today's US economic docket lacks any major market moving data. Hence, focus would be on Minneapolis Fed President Neel Kashkari's speech, which would be looked upon for some fresh clues over the central bank's monetary policy outlook and might eventually derive demand for the non-yielding yellow metal.

Technical levels to watch

Immediate support is pegged near $1275-74 area, below which the commodity seems more likely to break below $1271-70 support and head towards retesting $1262-61 important support.

On the upside, momentum above $1283-85 immediate hurdle could lift the metal back towards $1290 horizontal resistance, which is followed by multi-month highs resistance near $1295 area.