Gold dips to $1265, near-term bullish bias remains

After touching a three-week high level of $1271 on Thursday, Gold is retracing a bit on Friday to currently trade around $1265 level.

On Thursday, the previous metal initially dropped to $1256 before resuming its rally to the highest level since May 18 as weak Chinese inflation data was seen weighing on investor sentiment, boosting demand for safe-haven assets like treasuries and gold.

Meanwhile, a broad recovery for the greenback capped further upside for the yellow metal. Moreover, investors now seem to take a breather ahead of next week's key Federal Reserve and the Bank of Japan monetary policy meetings.

Nevertheless, the metal is still headed for a second consecutive week of smart gains.

Technical levels to watch

From current levels, immediate support is now pegged near $1260, below which the commodity might slide further but the fall is likely to be restricted around 50-day SMA near $1250-48 region.

Conversely, strength back above $1270 would reinforce near-term bullish momentum and is likely to further boost the metal, initially towards $1276 intermediate resistance ahead of a key resistance near $1290-95 region.