Gold defends $1250 level, holding steady near 3-1/2 month highs

After yesterday's failed attempt to conquer the very important 200-day SMA, and subsequent retracement, Gold gained some minor traction during Asian session on Tuesday and ultimately traded with mild positive bias. 

Overnight, the precious metal clocked a fresh 3-1/2 month highs and retreated in wake of renewed talks of the Fed hiking interest rates at its next monetary policy meeting in March. Meanwhile, buoyant sentiment surrounding the US equity markets, with the Dow hitting 12th record closing high, also dented the yellow metal's safe-haven appeal and prompted investors to take some profits off the table. 

The downslide, however, was limited amid prevalent uncertainty over the US President Donald Trump’s pro-growth economic policies. The recent slide in the US treasury bond yields reflected the market concerns and have been supportive of the precious metal's strong up-move in the past couple of months.

Hence, Trump's first address to the Congress would remain the key fundamental trigger for the metal’s near-term trajectory. Any details about Trump’s proposed reforms, or even a timeline, would trigger a fresh leg of US Dollar rally and eventually weigh on dollar-denominated commodities - like gold.

Technical levels to watch

Currently trading around $1254 level, momentum above $1257 level is likely to lift the commodity back towards 200-day SMA hurdle near $1262-63 region. A decisive strength above this immediate barrier now seems to pave way for further near-term appreciating move towards $1275 level with some intermediate resistance near $1267-68 area. 

On the flip side, weakness below $1250 region could get extended towards $1240 support level, which if broken would turn the metal vulnerable to break below $1230 intermediate support and head back towards testing 100-day SMA support near $1215 region.