Gold extends losses, drops below $1180 on commodity sell-off & USD strength
|- The unabated bearish pressure drags Gold to a fresh 21-month low.
- US Dollar Index stays in the positive territory below 97.
- Wall Street suffers heavy losses in the early NA session.
Following yesterday's weak recovery attempt, the troy ounce of precious metal lost more than $15 on the day to touch its lowest level since January of 2017 near $1177. As of writing, the XAU/USD pair was down 1.35% on the day at $1177.50.
A broad-based commodity sell-off led by oil is making it difficult for gold to take advantage of the risk-off mood in the NA session. At the moment, both the Dow Jones Industrial Average and the S&P 500 indexes are down nearly 1% on the day with the S&P 500 Energy Index dropping more than 2.5%.
On the other hand, the US Dollar Index, which has been preserving its bullish momentum since breaking above the 95.50 mark last week, came within a touching distance of the 97 mark today after the data from the United States showed that the retail sales increased 0.5% in July to surpass the market consensus of 0.1%. Furthermore, the Federal Reserve Bank of New York announced that the business activity in the manufacturing sector in the NY area expanded by a faster than expected pace with the headline Empire State Manufacturing Index improving to 25.6 in August from 22.6 in July.
Although the index looks like that it lost its bullish momentum in the last hours, it's still up 0.22% on the day at 96.87. There won't be any other macroeconomic data releases in the remainder of the day, and the pair is unlikely to find a catalyst that could trigger a recovery.
Technical outlook
The initial support for the pair could be seen at $1172 (Jan. 8, 2017, low) ahead of $1165 (Jan. 5, 2017, low) and $1155 (Dec. 9, 2016, low). On the upside, resistances align at $1194 (daily high), $1200 (psychological level) and $1212 (20-DMA).
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