Gold jumps to 2-week high on latest political jitters from the US

Gold continued gaining traction for the fifth consecutive session and built on its recovery move from near two-month lows touched last week.

The precious metal jumped to a two-week high level of $1245 and has now moved within striking distance of the very important 200-day SMA amid political uncertainty in the US. Following the news that the US President Donald Trump shared classified information with top Russian officials last week, The New York Times reported that Trump had asked then-FBI Director James Comey to end probe into his former national security advisor Michel Flynn’s ties to Russia. Escalating political worries spoofed global financial markets and drove flows towards perceived safe-haven assets, including gold. 

Adding to this, the ongoing slump in the US Dollar further boosted demand for dollar-denominated commodities and collaborated to the precious metal's up-move to its highest level since May 3. Moreover, the recent downbeat US economic data now seems to have dampened expectations for aggressive Fed rate-hike action through 2017 and is eventually benefitting the non-yielding metal. 

With global risk-aversion trade taking the front seat, absent US macroeconomic data might continue to boost the commodity, with a break through the very important 200-day SMA hurdle now seems a distinct possibility.

Technical levels to watch

On a sustained break through $1247 level (200-day SMA), the metal is likely to aim towards $1256 horizontal resistance ahead of its next major hurdle near $$1263-64 region. Conversely, failure to clear its immediate hurdle, and a subsequent retracement back below $1240 level, could drag the commodity back towards $1228 horizontal support.