Gold reverses Friday's tepid recovery gains, hangs closer to 2-week lows

After an initial spike to 4-day highs, gold came under some renewed selling pressure and inched back closer to last week's over 2-week lows.

Currently trading around $1263-62 region, the yellow metal's latest leg of downslide could be attributed to a mildly positive sentiment surrounding the greenback. Optimism led by a deal to keep the US federal government funded coupled with growing Fed rate-hike expectations helped the key US Dollar Index to move back above the 99.00 handle and was seen weighing on dollar-denominated commodities - like gold. 

   •  US Dollar picks up pace near 99.00 ahead of US ISM

Adding to this, improving investors' appetite for riskier assets - like equities, further dented the precious metal's safe-haven appeal and collaborated to the weaker tone at the start of a new trading week. 

Further losses, however, seemed limited amid holiday-thinned liquidity conditions, with European markets closed in observance of May Day and as market participants watch for any fresh developments around the US - North Korea stand-off. 

   •  US considering sanctions, military action to counter North Korea

Monday's focus would be on the US treasury secretary Steven Mnuchin's speech and the US economic docket, featuring the release of - core PCE price index, personal income / spending data and ISM Manufacturing PMI.

Technical levels to watch

Immediate support is pegged near $1260 area, below which the metal is likely to accelerate the slide towards the very important 200-day SMA support near $1253 region. On the upside, $1270 level now seems to have emerged as immediate resistance, which if cleared might trigger a short-covering bounce back towards $1275 horizontal resistance en-route $1279-80 hurdle.