Gold inter-markets: runs the risk of reversing Tuesday’s tepid recovery gains

Gold held a 5-day old trading range around 200-day SMA and is now heading back towards the top end of the range to currently trade around $1268-69 region.

Market expectation over the timing of next Fed rate-hike action has been a key driver of the yellow metal's move in the recent past. Growing speculations that the Federal Reserve would eventually go ahead and raise interest rates in December is weighing on non-yielding assets. An up-surge in the US longer-term (30-years) Treasury bond yields is supportive of the market expectations and is further reaffirmed by the ongoing up-move in the USD/JPY major. 

Moreover, continuous slide in the Volatility Index (VIX), leading to risk-on rally in the broader US equity index - S&P 500, is driving investors away from the perceived safe-haven assets and limiting any further up-move for the precious metal. 

The metal's appreciating move on Tuesday has been independent of the discussed intrinsic and could be categorized as a technical bounce from a strong horizontal support near $1260 area. Hence, the ongoing recovery runs the risk of a reversal from the very important 200-day SMA. This coupled with a broadly stronger US Dollar is likely to drag the metal back below $1250 level towards retesting October monthly lows support near $1240 region.