Gold retreats from 5-week tops but downside seems limited ahead of Friday’s NFP

Gold extended overnight retracement move from near five-week highs and traded with mild negative bias around $1266-67 region.

Wednesday's release of the Beige Book report, revealing US economy expanded at a “modest to moderate” pace through late May, reaffirmed expectations that the Federal Reserve would hike interest rates. The expectations is being reaffirmed by a sharp up-surge in the US treasury bond yields, which underpinned the greenback demand and was seen weighing on the non-yielding precious metal.

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However, geopolitical tensions and political uncertainty ahead of the UK general election on June 8 might continue to boost safe-haven demand and seems to limit any immediate sharp downslide. 

Traders are seemed to wait for Friday's US non-farm payrolls data in order to determine the US Dollar's near-term trajectory, which would eventually provide fresh impetus for dollar-denominated commodities - like gold. 

In the meantime, today's US economic docket that includes - ADP report, weekly jobless claims and ISM manufacturing PMI, would be looked upon for some short-term trading opportunities.

Technical levels to watch

Immediate support on the downside is pegged near $1262-61 area, below which the commodity is likely to head towards testing $1256-55 horizontal support before eventually dipping below $1250 level to test the very important 200-day SMA support near $1243-42 region.

On the upside, momentum back above $1270 level might continue to confront resistance near $1274-75 region, which if cleared decisively has the potential to lift the metal towards $1280 barrier en-route its next major hurdle near $1285 region.