Gold spikes to near two-week tops, now eyeing 200-DMA

   •  Last week’s recovery move supported by persistent USD weakness.
   •  Reviving safe-haven demand/subdued US bond yields provides an additional boost.
   •  Focus remains on the US tax bill vote, expected later today.

After an initial dip to $1260 area, gold regained traction and touched a two-week high near $1265 level during the early European session on Tuesday.

The precious metal extended last week's strong rebound move from near 5-month lows and held in positive territory for the fifth session in the previous six. 

Persistent US Dollar selling bias, despite the latest optimism over the passage of a sweeping US tax overhaul legislation, has been one of the key factors driving the dollar-denominated yellow metal higher. 

Adding to this, a cautious opening across European bourses, coupled with a subdued action surrounding the US Treasury bond yields further underpinned the non-yielding yellow metal's safe-haven appeal and collaborated to the up-move.

The commodity has now recovered around 2.5% and inched back closer to the very important 200-day SMA hurdle as investors remained cautious ahead of a Senate vote, expected later today.

Technical levels to watch

A follow-through up-move now seems to confront immediate resistance near the $1268 region (200-DMA), above which a fresh bout of short-covering could lift the metal towards $1275-77 supply zone.

On the flip side, $1261-60 area now seems to protect the immediate downside, which if broken might accelerate the fall back towards $1252 intermediate level area ahead of $1247-46 support.