Gold hangs near 3-week lows, remains below $1275 level

   •  Tax bill optimism-led persistent USD buying interest weighs.
   •  Tighter monetary policy expectations add to the selling pressure.
   •  200-DMA holds the key ahead of this week’s NFP. 

Gold maintained its offered bias through the mid-European session and now seems to have entered a bearish consolidation phase below $1275 level.

The US Dollar held on to its gains led by the passage of a highly-anticipated US tax overhaul bill and has been one of the key factors weighing on dollar-denominated commodities - like gold.

Hopes for the biggest tax law change since the 1980s now seems to have fueled expectations for a more aggressive Fed rate hike moves post-December and the same was evident from surging US Treasury bond yields, which further drove flows away from the non-yielding metal.

Meanwhile, a strong rally across European bourses and indications of a bullish opening in the US equity markets dented demand for traditional safe-haven assets and was also seen exerting downward pressure on the precious metal. 

It would now be interesting to see if bears remain in control or the yellow metal is able to attract some technical buying from closer to the very important 200-day SMA support ahead of this week's key US jobs data (NFP) on Friday.

Technical levels to watch

Weakness below $1270 level is likely to get extended towards the $1266 region (200-day SMA), below which the metal is likely to head back towards retesting Oct. monthly lows support near $1260 level.

On the upside, any recovery attempt beyond $1275 level now seems to confront immediate resistance near $1280 level ahead of 100-day SMA strong hurdle near the $1286 region.