Gold sinks to fresh 4-month lows, now eyeing $1200 mark

Gold continued with its recent bearish trajectory and dropped to the lowest level since mid-March, around $1205 during early European session on Monday. 

The precious metal remained under intense selling pressure at the start of a new trading week and extended last week's reversal move from $1228-30 resistance area. Solid headline NFP print for June reinforced expectations for higher US interest rates through 2017 and was seen weighing heavily on the non-yielding yellow metal.

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This coupled with a fresh wave of global risk-on trade, as depicted by strong gains in equity markets, further dented demand for traditional safe-haven assets and collaborated to the metal's fall to near four-month lows. 

The commodity has now moved within striking distance of the key $1200 psychological mark and with global central banks hinting towards an end of ultra-loose monetary policy stance, a follow through weakness below the mentioned handle now seems a distinct possibility.

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Technical levels to watch

Immediate support is pegged near $1200-$1198 region, below which the metal seems vulnerable to extend the slide towards $1187 support ahead of $1181 level (Jan. 27 low). On the upside, any recovery move back above $1212 level now seems to confront fresh supply near $1220 level, above which a bout of short-covering could lift the metal beyond $1230 level towards the very important 200-day SMA hurdle near $1232-33 region.