- US stocks slide in the early session on Tuesday.
- US Dollar Index consolidates gains below 96.
- Risk-off continues to dominate the markets.
The XAU/USD pair, which broke above $1230 earlier today as the precious metal gathered strength on safe-haven flows, extended its rally in the early NA session and touched its highest level since July 17 at $1240. At the moment, the pair is trading at $1237, adding nearly $15, or 1.25%, on the day.
Pressured by the escalating geopolitical tensions following the US President Trump's threat to withdraw from the nuclear arms agreement and concerns over the EC's decision to reject Italy's budget proposal, European equity indices fell to their lowest levels in nearly two years to reflect a flight-to-safety. The market mood also weighed on Wall Street and caused it to open sharply lower. At the moment, the S&P 500 and the Dow Jones Industrial Average indexes were down 2% and 1.5%, respectively.
"The combination of market risk in equities, political risk in Europe - Brexit and Italy - and economic risk around the globe have revived the traditional havens for flailing markets, the Dollar and Treasury assets. It doesn't hurt that the U.S. is also the world's healthiest major economy," FXStreet Senior Analyst Joseph Trevisani said on markets' risk perception.
Meanwhile, despite the disappointing Richmond Fed Manufacturing Index, which fell to 15 in October from 29 in September to fall short of the market expectation of 25, the US Dollar Index stays in its daily range a little below the 96 mark. With no other macroeconomic data releases in the remainder of the day, the market sentiment is likely to stay as the primary driver of the pair's price action.
Technical outlook
The CCI indicator on the daily chart rose to 100, suggesting that the bullish momentum is building up. Resistances for the pair could be seen at $1240 (daily high), $1248 (Jul. 12 high) and $1256 (Jul. 11 high). On the downside, supports are located at $1222 (daily low), $1215 (Oct. 12 low) and $1204 (50-DMA).
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