Gold corrects from 2-month tops, comes down to $1285 level

Gold edged lower on Monday and touched a session low level of $1285 during the early European session, eroding Friday's dismal US CPI-led gains to 2-month highs. 

On Friday, the precious metal touched a two-month high level of $1292 on softer US inflation report that dampened expectations of aggressive Fed monetary policy tightening cycle. However, a modest US Dollar recovery on Monday, which tends to weigh on dollar-denominated commodities, now seems to have prompted traders to take some profits off the table and has been one of the key factors contributing to the yellow metal's offered tone. 

This coupled with some signs of stability in global financial markets did little to extend any support to traditional safe-haven assets and further collaborated to the commodity's profit-taking slide. 

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The metal snapped four consecutive days of winning streak as the focus now shifts to this week's key event risk - FOMC meeting minutes. The minutes of the Fed's latest monetary policy meeting, along with a report on the US retail sales would now be looked upon for more hints over the timing of next Fed rate hike action, which would eventually help investors determine the next leg of directional move for the non-yielding commodity. 

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In absence of any major market moving releases on Monday, broader market risk sentiment and the USD price dynamics would remain key determinants of the metal's movement at the start of a new trading week. 

Technical levels to watch

Immediate support is pegged near $1281-80 region, below which the corrective slide could get extended towards $1273 intermediate level en-route $1268 important support. On the flip side, bulls would be eyeing for a sustained move beyond $1290 level, above which the metal is likely to aim towards reclaiming the key $1300 psychological mark.