Gold dips below $1270 as focus shifts to ECB decision

After retesting Wednesday's two-week high level of $1273, Gold erased early tepid gains and has now drifted into negative territory. 

Currently trading around $1268 region, the precious metal initially witnessed some follow through buying and was seen building on to its ongoing recovery momentum since the beginning of current trading week, lifting it back above the very important 200-day SMA. 

The metal's reversal from session peak has been primarily driven by a broad based greenback strength, which tends to weigh on dollar-denominated commodities - like gold. Moreover, upbeat sentiment around equity market is further denting the yellow metal's safe-haven appeal and is also contributing to profit taking move after three consecutive days of up-move. 

Focus now shifts to ECB monetary policy, where if the central bank decides to taper its monthly bond purchases could weigh heavily on the US Dollar and eventually trigger a rally in gold prices. Also in focus would be US economic data, which might provide some short-term trading opportunities.

Technical levels to watch

From current levels, 200-day SMA near $1266-65 region seems to act as immediate support below which the metal could slide back to $1258-57 support area and eventually head towards $1250 important support. On the upside, momentum above $1272-73 (two-week high) is likely to get extended towards $1276-77 resistance area, which if cleared should pave way for continuation of the commodity's near-term recovery trend.