Gold plunges to fresh multi-week lows near 200-DMA and rebounds sharply

Gold came under intense selling pressure during early European session on Monday and tumbled to fresh multi-week lows near $1235 region. 

The latest leg of sharp fall over the past half an hour lacked any fundamental driver and could be attributed to a fresh leg of sharp up-surge in the US Treasury bond yields, which tends to weigh on the non-yielding precious metal.

Adding to this, possibilities of some big stops being triggered on a sustained break below $1250 level might have also collaborated to the yellow metal's sudden plunge to the lowest level since May 17.

The metal, however, seems to have found some buying interest near the very important 200-day SMA support and has quickly recovered around $10 from lower levels to currently trade around $1245 region.

It would now be interesting to see if the rebound is led by any genuine buying or was solely driver by some short-covering from an important support. 

Technical levels to watch

The 200-day SMA near $1236-35 region remains immediate strong support to defend, which if broken is likely to accelerate the slide towards $1228 support area. On the upside, any recovery beyond $1246-47 region now seems to confront resistance near $1250 level, above which a fresh bout of short-covering could lift the commodity back towards $1260 strong resistance.