Gold surrenders early tepid recovery gains, probing lows near $1266

Gold faded early Asian session bullish spike to $1270 region and refreshed session lows during early European session, albeit has managed to hold just above Friday's multi-day through.

Growing prospects for an eventual Fed rate-hike action this week lifted the US treasury bond yields and was seen weighing on the non-yielding precious metal. Rising bond yields also extended some support to the US Dollar and further dented demand for dollar-denominated commodities, eventually collaborated to the yellow metal's drop to session lows near $1266 region.

It, however, remains to be seen if the commodity is able to hold on Friday's swing lows amid weaker trading sentiment across global equity markets, which tends to benefit traditional safe-haven assets, including gold.

Meanwhile, investors this week would remain focused on a slew of important US macro releases and the much awaited FOMC decision in order to determine the next leg of directional move for the commodity.

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Technical levels to watch

Immediate support is pegged near $1262 level, which if broken is likely to accelerate the slide towards $1258 intermediate support en-route $1255 horizontal support. On the upside, sustained recovery above $1270 level might trigger a short-covering bounce towards $1277-78 resistance ahead of $1280 level.