Gold recovery remains capped at 200-DMA

Gold trimmed some of the recovery gains closer to the very important 200-day SMA region but remained in positive territory for the second straight session.

Currently trading around $1258 level, the prevalent risk-off sentiment across global equity markets, led by disappointing Chinese trade balance data, is seen boosting demand for traditional safe-haven assets, including gold. Weaker-than-expected release of Chinese trade surplus for the month of September renewed worries of an economic slowdown in the world's second largest economy and is weighing on investor sentiment. 

However, the recovery lacked momentum and remained capped at 200-day SMA as increasing odds of an eventual Fed rate-hike action continues to benefit the greenback and is restricting any swift recovery for the non-yielding yellow metal.

Today's release of weekly jobless claims from the US might provide some impetus, while the broader trend would continue to be dependent on the prevalent investor risk-sentiment and US Dollar price dynamics.

Technical levels to watch

Immediate upside resistance is pegged at 200-day SMA near $1262 region, which if cleared decisively is likely to lift the metal beyond $1265 horizontal resistance towards its next major hurdle near $1275-77 zone.

On the downside, immediate support is seen at $1252-50 region below which the commodity is likely to head back towards multi-month lows support near $1241-40 area before dropping to $1235 horizontal support.