Gold hits fresh 3-week low, bears eyeing a decisive break below 200-DMA

Gold remained under some selling pressure for the second consecutive session and has now dropped to fresh 3-week lows.

Currently trading around $1253-52 region, the prevalent risk-on environment, as depicted by positive trading sentiment around equity markets, was seen denting the precious metal's safe-haven appeal.

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This coupled with a modest up-tick in the US treasury bond yields helped the US Dollar to reverse majority of its early losses and also weighed on dollar-denominated commodities - like gold. 

With today's slide, the commodity seems poised for a fresh bearish break down below the very important 200-day SMA support as investors now look forward to the outcome of the Fed's two-day monetary-policy meeting on Wednesday. 

Although the Fed is widely expected to leave benchmark rates unchanged but the accompanying rate-statement would be closely watched for clues over future rate-hikes and the central bank's outlook for the US economy, which would eventually derive demand for the non-yielding metal.

The Fed policy announcement is due just two days before the keenly watched US monthly employment report (NFP), scheduled for released on Friday, which is known to infuse a bout of volatility across global financial markets and might thus provide some fresh impetus for the yellow metal's safe-haven appeal.

Technical levels to watch

A follow through selling pressure below $1252-50 region (200-day SMA) is likely to drag the commodity towards $1245-44 horizontal support ahead of $1240 support. On the flip side, any recovery attempts now seems to confront immediate resistance near $1260 level, above which a bout of short-covering could lift the commodity beyond $1265 intermediate barrier towards its next major hurdle near $1270 area.