Gold corrects from 7-week tops, comes down to $1265 level

Gold stalled its recent bullish trajectory and corrected a bit from seven-week highs near $1271 region touched during Asian session on Monday. 

Escalating geopolitical tensions, after North Korea conducted another intercontinental ballistic missile test late on Friday boosted safe-haven demand and lifted the precious metal to its highest level since June 14. 

However, a modest greenback recovery, with the key US Dollar bouncing off multi-month lows, kept a lid on any further up-move for dollar-denominated commodities - like gold. Adding to this, traders also seemed inclined to take some profits off the table especially after three consecutive weeks of gains and gains of over 1% recorded in the previous week. 

   •  US Dollar firm around 93.30 ahead of data

Looking at the broader picture, the current pull-back might still be seen as buying opportunity amid deepening political turmoil in the world's largest economy and fading prospects of any additional Fed rate hike action in 2017, which might continue to lend support to the non-yielding commodity.

Technical levels to watch

Weakness below $1265 level could get extended towards $1260-59 horizontal support, below which the metal seems vulnerable to head back towards testing the very important 200-day SMA support near $1250 region. 

On the flip side, sustained momentum above $1270 area now seems to open room for continuation of the commodity's near-term upward trajectory towards $1279-80 hurdle en-route $1285 level.