Gold pulls away from 12-month lows, steadies near $1225
|- Wall Street records modest gains in the first half of the session.
- US Dollar Index fails to stay above the 95 mark.
- Technical indicators show oversold readings.
Following yesterday's sharp fall, the XAU/USD pair started the day on a negative note and extended its losses to its lowest level since July 2017 at $1220. However, with a fresh selling wave felt in the NA session, the pair retraced a portion of its daily losses and was last seen trading at $1225, where it was down 0.17% on the day.
The pair's price action seems to be driven by the greenback valuation on Wednesday. Earlier today, fueled by the losses witnessed in the EUR/USD and the GBP/USD pairs, the US Dollar Index rose above the 95 mark to renew its highest level since June 28. However, the index reversed its course in the last hours after the data from the U.S. showed a 12.3% and a 2.2% contraction in housing starts and building permits respectively. At the moment, the DXY is sticking to small daily gains moving sideways near 94.90.
In the meantime, the pair's recovery gains seem to stay limited as the relatively positive market sentiment in the second half of the day don't allow the demand for safe-havens to increase. As of writing, the Dow Jones Industrial Average was up 0.25% while the S&P 500 was adding 0.15%.
Later in the session, the Fed is going to publish its Beige Book, which provides a broad picture of the health of the economy. Investors will be paying a close attention to any remarks regarding rising concerns over Trump administration's trade policy and the buck's reaction to the publication could be the next catalyst for the pair.
Technical outlook
Despite this recent recovery, both the CCI and the RSI indicators on the daily chart remain in the oversold territory, suggesting that the pair could extend its technical recovery before the next leg down. On the downside, the initial support aligns at $1220 (daily low), $1207 (Jul. 7, 2017, low) and $1200 (psychological level). On the upside, resistances align at $1230 (daily high), $1240 (Jul. 17 opening level) and $1248 (20-DMA).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.