Gold weaker for fifth straight session; drops to 7-day lows below $1265 level

Gold retained its negative bias through early European session on Tuesday and held near 7-day lows amid prevalent risk-on mood.

A modest pick-up in investors' appetite for riskier assets - like equities, was seen denting the precious metal's safe-haven appeal. Adding to this, growing conviction for a Fed rate-hike action on Wednesday further collaborated to the offered tone surrounding the non-yielding yellow metal for the fifth consecutive session.

However, a mildly softer tone surrounding the US Dollar was seen lending some support to the dollar-denominated commodities, including gold, and has been the only factor limiting further downslide, at least for the time being.

Apart from the much awaited FOMC decision, investors will also pay close attention to any details on the central bank's plans to shrink its balance sheet later this year and important US macroeconomic data in order to determine the commodity's next leg of directional move.

Technical levels to watch

Immediate support is pegged near $1260 region (50-day SMA), below which the downslide is likely to get extended towards $1255 level en-route $1250 support and $1245 confluence region (100 & 200-day SMAs).

On the upside, sustained recovery beyond $1267 level (session tops), leading to a subsequent break through $1270 area, seems to trigger a short-covering rally towards $1279 horizontal hurdle with some intermediate resistance near $1274 region.