Gold jumps to highest level since Oct. 4, focus on Fed decision

After recording a monthly loss in October, Gold staged a recovery on Tuesday and continued with its near-term recovery trend for the fourth consecutive session. 

Currently trading around $1285-86 area, the highest level since October 4, the yellow metal finally seems to have regained control over the very important 200-day SMA. Broad based greenback retracement is boosting demand for dollar-denominated commodities and assisting the ongoing recovery. 

Looking at the broader picture, the precious metal has been trending with mild positive bias around 200-day SMA but has failed to gain momentum as investors await for further clarity over the timing of next Fed rate-hike action. Hence, focus would be on Wednesday's Fed monetary policy decision, where the central bank is not expected to announce any interest rate-hike but is likely to provide clues on the chances of such an action at December meeting. CME group's FedWatch Tool is currently pointing to 72.5% probability of Fed announcing an interest-rate hike in December.

Investors this week would also confront the release of monthly jobs report from the US, popularly known as NFP. A stronger headline NFP print would reaffirm market expectations, and would turn out to be a negative development for gold prices.

Technical levels to watch

A follow through buying interest above $1290 immediate resistance is likely to boost the pair immediately towards $1300 handle, which if cleared would negate any near-term bearish bias and could continue lifting the commodity higher in the near-term.

On the downside, $1276-75 area now seems to act as immediate support and is closely followed by 200-day SMA support near $1272 region. Renewed weakness below 200-day SMA is likely to drag the pair back towards $1262-60 support area before the metal eventually breaks through $1250 and aim towards testing October monthly low support near $1240 level.