Gold clings to gains above $1230 as Wall Street loses momentum
|- Commodity rally boosts the demand for the precious metal on Monday.
- US Dollar Index fails to stay above the 97 mark.
- Wall Street erases a large portion of early gains.
The XAU/USD pair started the week on a strong note and advanced to its highest level in four weeks near $1235. As of writing, the pair was trading at $1234.35, adding 1%, or $12.15, on a daily basis.
Earlier in the day, the upbeat tone surrounding commodities led by a strong recovery witnessed in crude oil prices helped the precious metal gather strength against its rivals. Furthermore, a broad-based selling pressure surrounding the greenback provided an additional support to the pair.
Although the sharp upsurge seen in Wall Street amid easing trade concerns capped the pair's upside for a short period of time at the beginning of the NA session, the pair gained traction in the last hour as major equity indexes in the U.S. started to pare their early gains. The Dow Jones Industrial Average and the S&P 500, which both were up more than 1% in the first hour of the session, were last seen adding 0.6% on the day.
On the other hand, falling T-bond yields in the U.S. and mixed manufacturing PMI data make it difficult for the greenback to find demand. At the moment, the US Dollar Index is down 0.3% on the day at 96.90.
- US: Markit Manufacturing PMI falls to 55.3 vs 55.4 expected.
- US: ISM Manufacturing PMI rises to 59.3 vs 57.5 expected.
Technical levels to consider
The initial resistance for the pair aligns at $1236 (Nov. 7 high) ahead of $1243 (Oct. 26 high) and $1248 (Jul. 12 high). On the downside, supports are located at $1220 (daily low/50-DMA), $1211 (Nov. 28 low) and $1200 (psychological level).
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