Gold bounces off 100-DMA support, Fed rate-hike expectations capping recovery

Having dipped to fresh multi-week lows, gold staged a goodish recovery from 100-day SMA support and held with minor gains through early European session.

In the immediate reaction to the pro-EU candidate Emmanuel Macron's victory in the French presidential election, the precious metal dropped to its lowest level since mid-March. The initial weakness, however, was used by bargain hunters to initiate some long positions / lighten their bearish bets.

Meanwhile, the ongoing up-move in the US treasury bond yields, against the backdrop of growing prospects for an eventual June Fed rate-hike action, underpinned the US Dollar demand and capped any additional recovery for the non-yielding yellow metal. 

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With the key event risk out of the way, the Fed rate-hike expectations would be drive the greenback and eventually influence movement surrounding dollar-denominated commodities - like gold.

Technical levels to watch

A follow through recovery beyond $1235 level is likely to get extended towards $1244-45 intermediate resistance before the commodity eventually head towards testing the very important 200-day SMA hurdle near $1250 region.

On the flip side, $1221-20 region (100-day SMA) remains immediate strong support to defend, which if broken would turn the metal vulnerable to head towards testing its next support near $1205-04 area, with some intermediate support near $1210 level.