Gold pulls away from 10-day highs, consolidates above $1260
|- US stocks surge to all-time highs on Monday.
- Improved market sentiment caps Gold's gains.
- DXY recovers above 93 and goes into a consolidation phase.
The XAU/USD pair, which was able to end the previous week $5 higher, extended its upside on Monday and reached its highest level in 10-days near $1264 before retracing a part of its daily earnings. As of writing, the pair was trading at $1261.76, adding 0.52% on the day.
Although the greenback failed to take advantage of the latest headlines that suggested the tax bill might be legalized later this week, major equity indexes started the day on a positive note and built on last Friday's gains to touch fresh record highs. As of writing, both the Dow Jones Industrial Average and the S&P 500 was adding 0.5% on the day. Meanwhile, after plummeting to its lowest level since early December at 92.92, the US Dollar Index gained some traction on the back of the US T-bond yields' upbeat performance. At the moment, the DXY is at 93.20, still down 0.3% on the day.
However, it's still early to assume that the pair could extend its recovery in the short-term as the most recent rise seem like a correction of the $50 drop that occurred during the first two weeks of December. Only a decisive break above the 200-DMA, which is located at $1272 could allow more buyers to come in and help the pair advance further.
Technical levels to consider
Above $1272 (200-DMA) the pair could aim for $1277 ahead of $1289 (Dec. 1 high). On the downside, supports align at $1252 (daily low), $1240 (Dec. 11 low) and $1236 (Dec. 12 low). In the meantime, the CCI indicator on the daily chart recently rose above the 0 mark, suggesting that the bearish pressure is not present anymore and the bullish momentum is slowly gaining strength.
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