Gold holding above $1280, upside seems capped

Gold managed to recover from Wednesday's low near $1272 support on disappointing US private sector employment report but faded its spike to $1290. After sliding lower for three straight days, the precious metal is now trading with marginal gains near $1280 level.

Earlier during the week, the metal managed to move above $1300 handle but couldn't sustain its strength at higher levels. The metal extended its profit-taking move on Wednesday before witnessing a bump-up to $1290 to eventually drop to day's low of $1272. The yellow metal, however, recovered a bit from low levels to settle near $1280 level.

The $1280 level represents 23.6% Fibonacci retracement level of $1207-$1303 up-move and Wednesday's recovery from lower levels was from 38.2% Fibonacci retracement level. The metal has now moved within a short-term descending trend-channel and ahead of Friday's monthly US jobs report, it seems unlikely to break-out from this channel and provide a clear direction trend for the near-term.

Technical levels to watch

On the downside, $1272 confluence region, also coinciding with the short-term descending trend-channel support, remains immediate support, which if broken would confirm extension of the near-term corrective move. Below $1272, the metal could immediately drop towards testing 50% Fibonacci retracement level support near $1255 region.

On the upside, the ascending trend-channel resistance near $1284, closely followed by hourly 100-SMA near $1287 are immediate resistance levels to clear. A sustained break-out through the ascending trend-channel resistance now seems to clear the path for the metal to dart back towards $1300 mark with $1295 level as intermediate resistance.