Gold price hits 2-week tops, now testing 100-DMA around $1325 level

London (May 11)  After an initial dip to $1318 area, gold regained positive traction and has now risen to its highest level in over two-weeks.

A combination of supportive factors helped the precious metal to continue with its upward march for the second consecutive session and build on its recovery move from the very important 200-day SMA.

The US Dollar extended its retracement from fresh yearly tops hit earlier this week and was seen benefitting dollar-denominated commodities - like gold. With traders still assessing the implication of yesterday's subdued inflation figures on the pace of the Fed's monetary policy normalization, a follow-through retracement in the US Treasury bond yields provided an additional boost to the non-yielding yellow metal.

Meanwhile, a weaker tone around European equity markets further underpinned demand for traditional safe-haven assets and remained supportive of the precious metal's strong up-move back towards 100-day SMA hurdle, near the $1325-26 region.

The commodity has now gained around 0.8% for the week and in absence of any major market moving economic releases from the US, seems all set to snap three consecutive weeks of losing streak.

Technical levels to watch

On a sustained move above the $1325-26 region (100-DMA), the metal is likely to extend the up-move further towards testing the $1331-33 supply zone. On the flip side, $1317-16 area now seems to protect the immediate downside, which if broken might prompt some fresh selling and drag the commodity back towards $1310 strong horizontal support.

FXstreet