Gold extends Friday’s sharp retreat from 5-month tops, eyeing $1250

Gold extended Friday's sharp reversal move from 5-month tops and traded with bearish bias back below the very important 200-day SMA.

A modest US Dollar strength, against the backdrop of a sharp drop in the US unemployment rate to a 10-year low level of 4.5% in March, was seen weighing on dollar-denominated commodities - like gold. Adding to this, growing expectations of additional Fed rate-hike actions through 2017, in wake of hawkish remarks by the New York Fed President William Dudley on Friday, remained supportive for the US treasury bond yields and has been driving flows away from the non-yielding precious metal.

Meanwhile, escalating geopolitical worries, following the US strike on a Syrian airbase, did little to extend any immediate support to the yellow metal's safe-haven appeal, with greenback price-dynamics being an exclusive driver since NY trading session on Friday. 

Later during the NY session on Monday, the Fed Chair Janet Yellen's speech might now provide fresh insights over the central bank's near-term monetary policy outlook and provide fresh stimulus for the commodity.

Technical levels to watch

A follow through retracement below $1250 immediate support, the metal is likely to extend the corrective slide back towards $1245 intermediate support ahead of $1240 level (March 31 low).
 
On the upside, momentum above $1255 level might continue to confront resistance at the 200-day SMA hurdle near $1258 region, above which the commodity seems more likely to surpass Friday's multi-month highs resistance near $1270 level and head towards testing its next major barrier near $1275 area.