Gold returns to $1190 area as Wall Street opens higher
|- US stocks start the day on a positive note.
- US Dollar Index shakes off the bearish pressure.
- $1200 stays as a critical threshold for gold.
The XAU/USD pair extended its recovery into a fourth day on Tuesday and inched closer to the critical $1200 mark. However, the pair met an interim resistance near $1196 in the European morning and erased its daily gains. As of writing, the pair was virtually unchanged on the day at $1191.
Although the broad-based greenback weakness allowed the pair to preserve its bullish momentum on Tuesday, a modest recovery witnessed in the USD and an improved market sentiment weighed on the pair. Expectations of the U.S. and China finding a common ground in the trade negotiations later this week helped investors turn their attention to risk-sensitive assets, which made it difficult for the safe-haven gold to stay resilient against the buck.
Major equity indexes started the day higher and the S&P 500 Index rose to its highest level since late January. At the moment, the Dow Jones Industrial Average and the S&P 500 are adding 0.7% and 0.3% respectively.
On the other hand, after recording losses on US President Trump's remarks on the Fed's monetary policy, the US Dollar Index pulled away from daily lows as investors are expecting Chairman Powell to reassure markets that the Fed is independent in the Jackson Hole symposium later this week.
Technical levels to consider
The first critical resistance for the pair aligns at $1200/02 (psychological level/20-DMA) ahead of $1212 (Aug. 13 high) and $1220 (Aug. 3 high). On the downside, supports could be seen at $1182 (Aug. 20 low), $1172 (Aug. 17 low) and $1160 (Aug. 16 low).
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