Gold eases from yearly tops on profit taking

Gold reversed majority of its early Asian session gains to fresh 5-month tops and has now retreated back to $1275 region ahead of the European opening.

Escalating geopolitical tension around the Korean peninsula continued boosting demand for traditional safe-haven assets and helped the precious metal to build on previous session strong surge beyond the key 200-day SMA hurdle. 

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Also supporting the up-move was a modest US Dollar retracement, which tends to benefit dollar-denominated commodities and lifted the yellow metal to an intraday high near $1280 level, marking the highest level since Nov. 10.

Having posted year-to-date gains of around 10%, traders seemed inclined to take some profits off the table and seemed to be the only factor attributable to the commodity's retracement from higher level. 

In absence of any major market moving US economic releases, broader market risk sentiment would continue to be an exclusive driver of the metal’s movement through Wednesday’s trading session.

Technical levels to watch

A follow through retracement below $1270 immediate support might trigger a corrective slide back towards the very important 200-day SMA resistance break-point, now turned support, near $1257 region, with some intermediate support near $1266 area.

Alternatively, on a sustained move above yearly tops resistance near $1280 level the commodity is likely to surpass $1291-92 intermediate resistance and aim towards reclaiming the key $1300 psychological mark.