Gold digesting recent gains to three month peaks, downside seems limited

Gold was seen consolidating yesterday's up-move to fresh three-month peaks and oscillated within a narrow trading band around $1240 level. 

Persistent uncertainty around the US President Donald Trump’s policy stance and political instability in Europe continues to drive flows towards traditional safe-haven assets and has been supportive of the precious metal's recent leg of up-move. 

Adding to this, declining US Treasury bond yields and fading bullish momentum in the US equity markets is also boosting gold demand as an attractive alternative investment asset class. 

Meanwhile, any mild retracement in the past couple of weeks has turned to be short-lived and has been bought into. Even the ongoing US Dollar recovery move, which tends to weigh on dollar-denominated commodities, has also failed to hinder the metal's prevalent bullish momentum and is pointing towards continuation of the near-term upward trajectory.

Later during NA session, the release of weekly jobless claims data from the US would be looked upon for short-term trading impetus.

Technical levels to watch

Momentum above $1245 level (yesterday’s high) is likely to get extended towards $1250 resistance area above which the commodity seems all set to head towards testing the very important 200day SMA hurdle near $1263-65 region.

On the flip side, $1235 level now seems to protect immediate downside, which if broken could drag the metal back towards 100-day SMA support near $1222 region with some intermediate support near $1229-27 zone.