Gold retreats from near one-month tops, but holds above $1250 level

Gold surrendered early gains to near one-month highs and has now drifted into negative territory, albeit continues holding above $1250 level.

A modest greenback recovery, with the key US Dollar Index bouncing off its lowest level in over a year, seems to be the only factor that could be attributed to the metal's pull-back from higher levels. A stronger dollar tends to weigh on dollar-denominated commodities - like gold. This coupled with a pickup in the US Treasury bond yields further collaborated towards keeping a lid on the non-yielding commodity's up-move.

However, weaker sentiment around global equity markets and political uncertainty in the US was seen lending support to traditional safe-haven assets, including the precious metal, and limiting further downside, at least for the time being.

Moreover, investors also seemed to opt for a wait and watch strategy ahead of this week's key event risk - FOMC meeting, which would provide fresh insight over the timing of the next Fed rate hike action and help determine the next leg of directional move for the metal.

With a relatively thin US economic docket, featuring the release of flash PMI prints and existing home sales data, broader market risk sentiment and the USD price dynamics would remain key determinants of the metal's movement at the start of a new week. 

Technical levels to watch

Weakness below $1250 level is likely to find support at 100-day SMA near $1247 region, below which the commodity could extend the corrective slide towards $1241 horizontal support. On the upside, $1256-57 area could act as an immediate hurdle, which if cleared should accelerate the up-move towards $1265-67 horizontal resistance with some intermediate resistance near $1262 level.