Gold loses momentum before reaching $1300, clings to small gains ahead of US CPI data
|- Greenback gains traction in the last hour.
- Brexit headlines weigh on market sentiment.
- Markets expect annual core CPI in the U.S. to remain steady at 2.2% in February.
After closing the previous day with small losses, the XAU/USD pair staged a modest rebound during the first half of the day on Tuesday but, once again, failed to break above the critical $1300 mark. As of writing, the pair was trading at $1296, adding $2.5 on a daily basis.
With latest Brexit headlines surrounding Brexit hurting the optimism of the Parliament backing PM May's deal later today, the GBP/USD pair came under heavy bearish pressure and allowed the greenback to find demand, making it difficult for the precious metal to continue to gain value in USD terms. The US Dollar Index, which slumped below the 97 handle earlier in the session, was last seen adding 0.3% on the day at 97.25.
On the other hand, the above-mentioned political developments seem to be weighing on the market sentiment and forcing major European equity indices to turn red in the session while helping safe-havens stay resilient. At the moment, both the Euro Stoxx 50 and Germany's DAX are down 0.3% on the day.
Later in the day, inflation data from the U.S. will be looked upon for fresh impetus. Although the Fed takes the core PCE price index as its preferred gauge of inflation, a large diversion in the CPI reading could receive a significant reaction from the market.
Key technical levels to consider
With a daily close above $1300 (psychological level), the pair could aim for $1306 (50-DMA) and $1315 (Mar. 1 high). On the downside, supports are located at $1292 (daily low), $1285 (Mar. 8 low) and $1280 (Mar. 7 low).
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