Gold trims early strong gains closer to weekly highs, retreats back to $1250

Gold trimmed some of its early strong gains closer to weekly tops and has now retreated to $1250 region ahead of the weekly jobless claims data from the US.

A modest recovery in oil prices eased some of the disinflationary concerns and lifted the US Treasury bond yields, which was eventually seen weighing on the non-yielding precious metal. 

Adding to this, a sharp rebound in European equity markets further drove investors away from traditional safe-haven assets and collaborated to the yellow metal's retracement from session highs near $1255 region.

However, a subdued action around the US Dollar was seen lending some support to the dollar-denominated commodity and helped the metal to hold in positive territory for the second consecutive session.

Next on tap would be the release of weekly jobless claims data ahead of Federal Reserve Governor Jerome Powell's testimony before the US Senate Committee on Banking, which might influence the sentiment surrounding the greenback and provide some fresh impetus for the commodity.

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Technical levels to watch

A follow through retracement now seems to find support near $1246 level, below which a fresh wave of selling interest is likely to accelerate the slide towards $1242 support area before the commodity eventually drops to the very important 200-day SMA support near $1237 region.

On the upside, sustained move beyond $1254-55 region (session tops) is likely to lift the metal towards $1260 horizontal level en-route the next major hurdle near $1265-67 region.