Gold extends losses for 8th consecutive session, inching closer to 200-DMA

Gold extended losses for the eight consecutive session and remained close to over 3 1/2 month lows touched on Wednesday, inching closer to the very important 200-day SMA. 

Currently trading around $1265 region, the precious metal extended losses for the eighth consecutive session and seems to be heading back towards yesterday's multi-month lows. A sharp rise in the US services sector activity dented the metal’s investment appeal on Wednesday and the metal reversed tepid recovery gains to turn negative after the US ISM non-manufacturing PMI printed an 11-month high reading of 57.1 in September and surpassed even the most optimistic estimates. 

Meanwhile, reviving hopes of an eventual Fed rate-hike action later this year continued driving the US Dollar higher, which tends to weigh on dollar-denominated commodities - like gold. Adding to this, buoyant US equity markets drove investors away from the traditional safe-haven assets - like Yen, bonds and gold. 

Focus now shifts to one of the most keenly watched US economic indicators, monthly jobs report, scheduled for release on Friday, which would provide fresh clues over the possibilities of the Federal Reserve 's next monetary policy move and trigger the next leg of directional move for the commodity.

Technical levels to watch

Immediate downside support is pegged near $1260-58 region (200-day SMA), which if broken decisively might open room for a fresh leg of depreciating move for the commodity initially towards $1250 level support and eventually towards its next major support near $1235 region.

On the upside, $1270 level now becomes immediate resistance above which the recovery could get extended towards Wednesday's high level of $1277. Momentum above $1275-77 resistance could boost the commodity further but any further up-move might now be capped at $1290 strong horizontal resistance.