Gold extends recovery momentum, moves back above 200-DMA

Gold extended recovery from a 4-month low touched last week but failed to clear Friday's swing high resistance near $1265 level.

Currently trading around $1262 level, the precious metal has managed to move back above the very important 200-day SMA despite of Friday's comments from Cleveland Fed President Loretta Mester that continued supporting market expectations of an eventual Fed rate hike action by the end of this year. 

Following the comments, the yellow metal ran through fresh offers and erased disappointing headline NFP print-led its tepid recovery gains and dropped to a fresh 4-month low before settling with only marginal gains at $1256 level, sharply lower for the second consecutive week. 

On the first day of new trading week, Donald Trump's strong performance at the second presidential debate is fueling risk-off trade and supporting the metal's safe-haven demand.

With US markets closed in observance of Columbus Day, broader market risk sentiment would be the key drive of the commodity's next leg of move on Monday. 

Technical levels to watch

Momentum above $1265 immediate resistance is likely to get extended immediately towards $1275-77 horizontal resistance above which a strong bout of short-covering seems to lift the commodity back towards $1300 psychological mark.

On the flip side, sustained weakness back below $1255 might now turn the commodity vulnerable to break through Friday's 4-month low support near $1240 region and aim towards testing its next major support near $1225 level.