Gold struggles to break above $1200 as DXY recovers from daily lows
|- US Dollar Index finds support ahead of 95.
- Wall Street stays in the negative territory.
- FOMC members are scheduled to speak later in the session.
After losing nearly $10 and closing the day below the critical $1200 mark on Tuesday, the troy ounce of the precious metal recovered the majority of its losses but failed to retake that level. As of writing, the XAU/USD pair is trading at $1197, up 0.45% on the day.
The selling pressure that the greenback encountered following the trade balance figures and remarks by the St Louis Fed President in the early NA session provided a boost to the pair on Wednesday. Bullard, a known dove, argued that the flattening yield curve and the inflation both signalled that the monetary policy was already neutral and reiterated that the Fed needed to pause rate hikes in the short term. In the meantime, today's data showed that the trade balance in the U.S. rose to $50.1 billion in August from $45.7 billion in July.
Furthermore, the dollar continued to weaken after the GBP/USD rallied on reports of Germany looking to make concessions in order to reach a Brexit deal. However, after the German government denied these reports, the pair retraced the majority of its gains and helped the US Dollar Index reverse its course. The index, which dropped all the way down to 95.09 in the day, was last seen at 95.20. Towards the end of the session, FOMC members Williams, Kashkai, and Bostic will be giving speeches.
Despite the modest recovery seen in the greenback, the fact that major equity indexes in the United States remain in the negative territory after starting the day slightly lower helps the XAU/USD pair preserve its daily gains. Nevertheless, unless the pair continues to trade below $1200 at the end of the day, it could have a difficult time extending its gains.
Technical levels to consider
The immediate support for the pair could be seen at $1193 (20-DMA) ahead of $1183 (Aug. 24 low) and $1173 (Aug. 15 low). On the upside, resistances align at $1200 (psychological level), $1212 (50-DMA) and $1224 (Aug. 1 high).
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