Gold continues to gain traction, breaks through 200-DMA barrier

Gold continued gaining traction through European session on Wednesday and spiked closer to $1250 level, albeit has retraced a bit from highs.

Currently hovering around the very important 200-day SMA, near $1247 region, a fresh wave of global risk-aversion trade, in wake of political jitters from the US, was seen driving flows towards traditional safe-haven assets, including gold.

Moreover, a slump in the US treasury bond yields, amid fading expectations of a faster Fed rate-tightening cycle on the back of recent lackluster US macro data, further weighed on the US Dollar and provided an additional boost to dollar-denominated commodities - like gold. 

With today's up-move, for the fifth consecutive session, the yellow metal has now recovered in excess of 2.5% from near two-month lows touched last week. Given the prevalent risk-off sentiment across global financial markets, led by escalating political concerns in the world's largest economy, a follow through buying interest further beyond the 200-day SMA hurdle remains a distinct possibility.

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Technical levels to watch

A sustained move above $1250 level would reaffirm near-term bullish bias and lift the metal towards $1256 immediate resistance, above which the up-move seems more likely to get extended towards the next hurdle near $1264 area. On the flip side, any retracement below $1245 level now seems to find immediate support near $1240 region and is closely followed by its next support around $1236 area.