Gold retreats from session peak, remains capped below $1200 mark

Having posted a session high just below $1200 mark, Gold retreated and trimmed majority of tepid recovery gains amid renewed greenback buying interest.

Currently trading around $1188-89 region, resurgent greenback buying interest is weighing on dollar-denominated commodities - like gold, which otherwise should have gained further traction on the back of safe-haven demand amid prevalent risk-off sentiment, as depicted by negative sentiment around European equity markets. 

Moreover, growing expectations of faster Fed rate-hike outlook in 2017 is further denting demand for non-interest-bearing yellow metal and restricted any swift recovery from the lowest level since February. Moreover, market participants also seemed reluctant to carry big bets going into this week's key event risks - revised US GDP print on Tuesday and one of the most keenly watched US economic indicator, NFP on Friday. 

From technical perspective, the metal's inability to build on Monday's tepid recovery bounce from multi-month lows would now be seen as a technical rebound from near-term oversold conditions. Hence, it would be prudent to conclude that the metal remains vulnerable to continue drifting lower in the near-term. 

Technical levels to watch

Weakness below $1185 immediate support is likely to get extended below session low towards $1180 horizontal zone, en-route multi-month lows support near $1171-70 region. On the upside, sustained recovery above $1195 level might now trigger a fresh bout of short-covering and lift the metal beyond $1200 mark towards testing its next major hurdle near $1207 level.

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