Gold surrenders daily gains, flirting with lows near $1265 region

Gold surrendered all of its Asian session gains to $1270 level and drifted into negative territory, now probing daily lows near $1265 region.

The precious metal failed to build on early bullish momentum amid firm expectations for an eventual Fed rate-hike action, which extended some support to the US Dollar and weighed on dollar-denominated commodities. 

Fed to hike rates, raising target range for the federal funds rate to 1.00-1.25% - Rabobank

Heading into the key event risk - FOMC decision, repositioning trade might have also prompted traders to lighten their positions and further collaborated to the retracement since mid-European session. 

Adding to this, a strong rally in European equity indices drove investors away from traditional safe-haven assets and collaborated to the yellow metal's retracement from higher levels. 

Traders now look forward to important US macro data - inflation figures and monthly retail sales data, for some fresh trading impetus. However, focus would remain on the much awaited Fed announcement and subsequent press conference, where hints over the central bank's near-term monetary policy outlook would now be the big fundamental catalyst driving the non-yielding metal in the near-term. 

Technical levels to watch

Immediate support remains near $1260 region (50-day SMA), below which the downward trajectory is likely to get extended towards $1250 intermediate support en-route 100-day SMA near $1245 region. On the upside, $1270 level now becomes immediate hurdle, which if conquered should lift the commodity towards $1277-79 horizontal resistance ahead of $1284-85 barrier.