Gold bounces off two-week lows, awaits Trump’s tax plan for fresh impetus

Gold managed to recovery early lost ground to two-week lows and has now moved into positive territory, snapping two consecutive days of losing streak.

Currently trading around $1265 level, testing session tops, a slightly cautious opening in the European equity markets extended some support to the precious metal's safe-haven appeal. Adding to this, a sharp retracement in the US treasury bond yields further collaborated to the yellow metal's recovery move from the lowest level since April 11.

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The gains, however, were tepid amid renewed optimism surrounding an expected tax reform announcement from the US President Donald Trump, later during the day. Moreover, a modest greenback recovery, with the key US Dollar Index inching back closer to the 99.00 handle, might also keep a lid on additional up-move for the dollar-denominated commodity, gold. 

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With an empty US economic docket, the commodity remains at the mercy of broader market risk-sentiment and the USD price-dynamics as investors keenly await details about the US President Donald Trump's promised package to overhaul the US tax code.

Technical levels to watch

Immediate resistance is pegged near $1270 area, above which the metal is likely aim towards $1277-78 horizontal resistance. A follow through momentum beyond $1280 level might trigger a short-covering rally towards $1287-88 resistance ahead of multi-month highs hurdle near $1295 level. 

On the flip side, weakness below two-week lows support near $1260 level could get extended towards the very important 200-day SMA support near $1254 region en-route $1247 horizontal support.