Gold bounces off 2-month lows in pre-NFP repositioning trade

Gold gained some positive traction during European session on Friday and recovered part of previous session's slump to near two-month lows.

The precious metal's latest leg of recovery move over the past couple of hours was primarily driven by a modest US Dollar retracement, amid some repositioning trade ahead of today's important release - the US monthly jobs report.

Heading into the key event risk, cautious investor sentiment was also seen lending some support to the yellow metal's safe-haven appeal and seems have prompted some short-covering bounce. 

It, however, remains to be seen if the up-move is sustainable amid continous upsurge in the US Treasury bond yields, on growing prospects for additional Fed rate hike move in 2017 and which tends to dent demand for the non-yielding commodity. 

Moreover, the US President Donald Trump's proposal of the biggest overhaul of the US tax system in three decades might continue to underpin the USD demand and collaborated towards keeping a lid on any meaningful up-move for dollar-denominated commodities - like gold.

Meanwhile, today's focus would remain on the keenly watched NFP data, which would be looked upon for some short-term trading impetus later during the NA session.

Technical levels to watch

Currently hovering around $1270 level, immediate resistance is pegged at 100-day SMA near the $1273-74 region, above which a bout of short-covering could lift the metal back above $1280 level towards its next resistance near the $1284-85 horizontal zone.

On the flip side, sustained weakness below $1268 level would turn the commodity vulnerable to extend its near-term downward trajectory towards $1260 area and $1257-56 support area.