Gold recovers early lost ground, little changed around 7-week highs

Gold reversed a knee-jerk drop to session lows near the $1262 region and recovered back to the pre-US data release level, closer to seven week highs. 

The precious metal fell sharply in reaction to the US data that showed the core PCE price Index, the Fed's preferred inflation measure, edged up to 1.5% in the 12-months through June. The fall, however, turned out to be short-lived and was quickly bought into after the US consumer spending barely rose in June as personal income disappointingly remained unchanged. 

Although today's mixed US economic data might have done little to influence the Fed's near-term monetary policy outlook but provided a minor lift to the yellow metal, back closer to $1270 region. 

Depite of uptick, the metal has so far held in negative territory and is being weighed down by a goodish US Dollar recovery, which tends to dent demand for dollar-denominated commodities - like gold.

Up next would be the release of ISM manufacturing PMI, which would be looked upon for some short-term trading impetus. However, the key focus would remain on Friday's NFP data, which might now act as the next big fundamental trigger for the metal's near-term trajectory.

Technical levels to watch

Bulls would be eyeing for a strong follow through buying interest beyond $1270 level, above which the bullish momentum could get extended towards $1279-80 intermediate resistance en-route $1285 level. On the flip side, weakness back below $1265 level would now turn the commodity vulnerable to break through $1260 support and aim towards testing the very important 200-day SMA support near the $1250 region.