Gold hovers near two-month highs, around $1280 level

After an initial dip to the $1275 region, gold regained traction and advanced to near two-month highs in the region of $1280 level. 

The precious metal continues to benefit from safe-haven demand triggered by rising geopolitical tensions, especially after the latest war of words between the US and North Korea. In response to the US President Donald Trump's "fire and fury" comments, N. Korea threatened a missile strike on the US Pacific territory of Guam and bolstered haven buying in global financial markets. 

As the tensions began to settle, as depicted by signs of stability in global financial markets, competing forces, like strengthening US Dollar, which tends to dent demand for dollar-denominated commodities, was now seen keeping a lid on further up-move, at least for the time being. 

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Meanwhile, investors also seemed to await for the US inflation figures, due for release on Friday, which would provide clues over the timing of next Fed rate hike action and eventually provide fresh impetus for the non-yielding metal. 

In the meantime, today's second-tier US economic data - weekly jobless claims and PPI print, would be looked upon for short-term trading opportunities later during the NA session.

Technical levels to watch

On a sustained move beyond $1280-81 region, the commodity is likely to aim towards $1294-94 strong hurdle with some intermediate resistance near $1285-87 zone. Conversely, any meaningful pull-back now seems to find immediate support near $1274 level, which is closely followed by a strong horizontal support near the $1269-68 area.