Gold digesting last week’s up-surge to 3-1/2 month highs

Gold was seen consolidating last week's strong gains to 3-1/2 month peaks and confined in a narrow trading band just below the very important 200-day SMA.

Currently trading around $1257 region, a bullish consolidative price action around the key US Dollar Index has failed to provide any fresh impetus for dollar-denominated commodities, including gold. However, a bearish trading sentiment surrounding equity markets was seen lending some support to the precious metal's safe-haven appeal and eventually leading to a range-bound move at the start of a new trading week.

Meanwhile, a modest recovery in the US Treasury bond yields is weighing a bit on the non-yielding yellow metal as investors now look forward to the US President Donald Trump's first address to Congress on Tuesday in order to seek clarity over the new administration’s expansive fiscal policies, which would enable investors to determine the next leg of directional move.

Later during NA session, the US economic releases - durable goods orders and pending home sales, might provide some impetus for short-term traders ahead of Dallas Fed President Robert Kaplan's speech later during the day.

Technical levels to watch

Immediate upside resistance is pegged at the very important 200-day SMA near $1260-61 region and momentum above this immediate hurdle is likely to get extended towards $1275 area with some intermediate resistance near $1271-72 area. On the flip side, weakness below $1251-50 immediate support is likely to drag the commodity back towards $1240 horizontal zone ahead of $1235 strong support.