Gold bounces to $1255 on USD retracement, still below 200-DMA

A minor greenback retracement assisted Gold to register a tepid recovery bounce on Wednesday and defend $1250 level support.

Currently trading around $1256 level, the precious metal on Tuesday once again failed to register any meaningful recovery and faced rejection at the very important 200-day SMA. The metal subsequently turned lower amid broad based US Dollar strength, which tends to weigh on dollar-denominated commodities - like gold. 

A sharp slide in the US equity markets failed to boost the yellow metal's safe-haven appeal as increasing prospects of another rate-hike action from the Federal Reserve before the end of this year dented demand for non-yielding commodities and pushed gold price lower.

Hence, investors will remain focused on today's release of minutes from FOMC's September meeting, later during NY session, which will determine probability of a December Fed rate-hike action and provide impetus for a fresh leg of directional move in gold prices. 

Technical levels to watch

Immediate upside resistance remains at 200-day SMA near $1260 region, which if cleared is likely to lift the metal back towards weekly high resistance near $1265 level. A follow through buying interest has the potential to boost the commodity further towards its next major hurdle near $1275-77 region.

On the downside, sustained weakness below $1250 immediate support might turn the metal vulnerable to head back towards last week's low support around $1241 level below which the commodity is likely to immediately drift towards $1235 support area.