Gold rises over 1% to hit one-month high on weaker USD

Gold regained traction and rose over 1% to touch a one-month high on Monday amid weaker greenback and global risk-aversion.

The US President Donald Trump's failure to gain enough support to get the crucial healthcare bill passed now seems to have raised concerns over his ability to push through the promised tax reforms and huge infrastructure spending. The skepticism triggered a broad based US Dollar sell-off, taking the key US Dollar Index to nearly two-month lows, and benefitted dollar-denominated commodities - like gold.

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Also collaborating to Monday's strong up-surge was a fresh wave of global risk-aversion trade, which was seen boosting demand for the precious metal's traditional safe-haven appeal and lifted it to fresh monthly tops, back closer to the very important 200-day SMA.

In absence of any major market moving economic releases on Monday, fading Trump-reflation trade might continue to weigh on the buck and hence, a break through the key 200-day SMA hurdle now seems a distinct possibility.

Technical levels to watch

A follow through momentum above $1260 level (200-day SMA), leading to a subsequent strength beyond $1264 level (Feb. 27), now seems to lift the commodity beyond $1270 level towards testing its next hurdle near $1275-76 region.

On the downside, $1252-50 area now becomes immediate support to defend, which if broken could extend the corrective slide towards $1245 (Friday's weekly closing level). Any further weakness below $1245 support now seems to be limited and hence, is likely to find strong support near $1240 region.