Gold upside seems capped near $1270

Gold seems to consolidate below $1270 level after registering a steep fall on Monday and is currently trading near 2-week low.

As the US Dollar found renewed strength, gold has fallen in five out of past six sessions, erasing all of the jobs data-fueled gains seen on Friday last week. A firm dollar usually exerts pressure on dollar-denominated assets such as gold. A further strength in the greenback might continue to hurt appetite for the precious metal.

On Tuesday, Gold attempted a recovery from sub-$1260 level but failed to build on to the recovery momentum beyond $1268 level, representing 38.2% Fibonacci retracement level o $1207-$1303 upswing, support break-point turned immediate resistance. However, immediate downside also seems to be limited by an important confluence support near $1257-55 area, comprising of 20-day SMA and 50% Fibonacci retracement level.

Technical levels to watch

Recovery momentum above 38.2% Fibonacci retracement level resistance near $1267 level seems to assist prices to move higher towards its next horizontal resistance near $1277-78 region.

Meanwhile, weakness below $1257-55 confluence support seems to drag it immediately below $1250 level before heading towards 61.8% Fibonacci retracement level support near $1245-44 area.