Gold spikes to fresh session tops, near $1265 region

Gold continued gaining traction through the mid-European trading session and has now jumped to fresh session peaks near the $1265 region.

With the markets looking past Friday's strong US jobs report, a fresh wave of US Dollar selling pressure on Tuesday was seen benefitting dollar-denominated commodities - like gold. 

Adding to this, fading prospects of additional Fed rate hike action in 2017, amid concerns of easing inflationary pressure in the US, further drove flows towards the non-yielding precious metal and collaborated to Tuesday's up-move.

Hence, this week's US inflation figures would provide fresh clues over the timing of next Fed rate hike action, which would determine if the greenback is able to register any meaningful recovery and would provide fresh impetus for the metal's near-term trajectory.

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Apart from the broad based USD weakness, today’s up-move could also be attributed to the prevalent cautious environment across global financial markets, which is seen benefitting the yellow metal’s safe-haven appeal. 

Meanwhile, possibilities of some stops being triggered on a decisive move back above $1260-61 immediate hurdle might have also collaborated to the commodity’s sharp uptick over the past hour or so.

In absence of any major market moving economic releases from the US, broader market risk sentiment and the USD price dynamics would continue to act as key drivers of the metal’s movement through Tuesday’s trading session.

Technical levels to watch

Immediate resistance is pegged near the $1266-67 region, above which the momentum could get extended back towards $1270 hurdle en-route multi-week tops resistance near $1274-75 zone.

On the flip side, $1260 level now becomes an immediate support to defend, which if broken would turn the commodity vulnerable to aim back towards testing 100-day SMA support near $1253 region.