Gold rises to $1295 as Wall Street starts to erase early gains

• US stocks struggle to push higher on Wednesday.
• US Dollar Index continues to move sideways above 96.
• Coming up: Fed's Beige Book and no confidence vote in UK.

Since failing to surpass the $1300 mark earlier in January, the XAU/USD pair has been fluctuating in a tight range and today's price action is no different. After easing below the $1290 earlier in the day, the pair edged higher in the last hour and renewed its session high at $1295. As of writing, the pair was up 0.4% on the day at $1294, adding $5 on a daily basis.

The recent uptick witnessed in the pair seems to be a product of souring market sentiment as reflected by the trading action in Wall Street. Following a positive start to the day, major equity indexes in the U.S. were able to push higher before losing their traction. The Dow Jones Industrial Average, which added as much as 0.75%, was last up 0.4% and the Nasdaq Composite was clinging to small gains, rising only 0.1%. 

On the other hand, with the greenback staying in the green above the 96 handle, the pair is unlikely to challenge the critical $1300 mark. Today's data from the U.S. showed that the housing sector has shown a slight improvement with the NAHB's Business Confidence Index coming in 58 vs market expectation of 56.

Later in the session, markets will be paying close attention to the leadership challenge in the UK. Although it seems unlikely, if British Prime Minister Theresa May loses the confidence vote and the UK goes for a general election, safe-havens could start to gather strength against its rivals. 

Technical levels to consider