Gold faces rejection near 100-DMA hurdle, reverses early recovery gains

Gold reversed all of its early recovery gains beyond $1210 level and is now headed back to the key $1200 psychological mark.

The precious metal stalled it's recovery move from Friday's five-week lows near an important 100-day SMA support break-point, now turned immediate resistance, amid prevalent risk-on mood. Improving investors' risk-appetite tends to drive flows away from traditional safe-haven assets, including gold. 

Meanwhile, a follow through US Dollar weakness, against the backdrop of Friday's dismal wage growth data from the US, is lending some support to the dollar-denominated commodities and helped the yellow metal to defend $1200 mark, at least for the time being.

Investors' focus would remain glued to the outcome of two-day FOMC policy meeting. Although market participants already seem to have priced-in an imminent rate-hike action, the central bank commentary and updated economic projections would be keenly scrutinized to ascertain the pace of further rate-hikes, which would eventually determine the metal's next leg of directional move.

Technical outlook

Carol Harmer, Founder at charmertradingacademy.com notes, "we need to break 1212 first...If we can do this we can then see 1218 to 1224....When the short term charts are bearish you can get quite a good pullback....Now if 1204 fails to hold we look again at the 1197/95 area...and we only at this point buy dips but again stops below 1191...."