Gold erases majority of weekly gains, now trying to defend 100-DMA support

Gold extended its reversal move from three-month tops and fell on Friday for the second consecutive day, reversing majority of its weekly gains. 

Currently trading around $1222 region, the precious metal has now moved within striking distance of 100-day SMA immediate support amid renewed greenback strength in wake of Trump’s teaser on an imminent tax-policy announcement. The US Dollar gained traction across the board after Trump said that a “phenomenal” tax plan would be announced in coming weeks and drove flows away from dollar-denominated commodities - like gold.

Meanwhile, the US economic data released on Thursday showed weekly jobless claims fell to 234K and remained closer to 43-year low of 233K touched in November. The data continues to reflect the underlying strength in the US labor market and kept hopes alive for additional Fed rate-hike, which eventually dented demand for the non-yielding yellow metal.

Meanwhile, upbeat Chinese trade balance data on Friday was also supportive of the prevalent risk-on mood and is further weighing on the precious metal's safe-haven appeal. 

Later during the day, the preliminary release of UoM Consumer Sentiment index would be looked upon for some trading impetus during NA session. The key focus, however, would be on Japanese Prime Minister Shinzo Abe’s meeting with the US President Donald Trump, which is expected to trigger a fresh bout of volatility in global financial markets and derive the commodity's safe-haven demand.

Technical levels to watch

A follow through selling pressure below $1220 support (100-day SMA), leading to a subsequent weakness below $1227 horizontal support, is likely to accelerate the slide towards $1210 support ahead of $1205 and $1200 psychological mark.

Meanwhile on the upside, $1226 level now becomes immediate resistance, which if cleared is likely to lift the metal back towards $1234-35 resistance area. Momentum above $1235 level could get extended towards daily closing highs resistance near $1240-41 region.