Gold sits at 3-week tops on increased physical demand

Gold traded firmer on Wednesday and built onto yesterday’s gains, as the sentiment remains underpinned by rising physical demand heading into a week-long festival season in the world’s second largest consumer, India.

Gold eyes $ 1300

Currently, Comex gold futures trade +0.23% higher at 1276.50, looking for a retest of three-week highs reached a day before at $ 1277.45. Gold rallied more-than $10 yesterday after the US dollar stalled its ongoing upward rally and dropped sharply against its main peers, after having failed to sustain near eight-month peaks.

While renewed Asian demand for gold in the physical markets on account of onset of a festive season in India also contributed to the rally in the metal.

Moreover, the latest data from the IMF showed that Russia and Kazakhstan continued to boost their gold reserves in September, which also buoyed the sentiment around gold.

Meanwhile, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.34% to 956.83 tonnes on Tuesday from 953.56 tonnes on Monday. Next in focus remains the US dataflow for further incentives on the USD-sensitive gold.

Comex Gold Technical Levels                                  

The metal has an immediate resistance at 1280 (daily R3) and 1288.38 (200-DMA). Meanwhile, the support stands at 1268.80 (5-DMA) below which doors could open for 1260 (round figure).