Gold advances to fresh monthly tops above $1290

  • Gold up more than $20 for the week.
  • USD weakness remains as the main theme on Thursday.
  • US stocks start the day slightly higher.

The XAU/USD pair continued to push higher on Thursday and is looking to close the day higher for the eighth time in the last ten trading days. At the moment, the pair is trading at $1293, slightly below its recently renewed monthly high of $1295, and is gaining more than $6, or 0.5%, on the day.

The pair's upsurge seems to be the product of a broad-based greenback weakness since investors came back from the Christmas break on Tuesday. After advancing to its best level since March last week, the 10-year T-bond yields staged a deep correction and weighed on the greenback during the first half of the week. 

Following today's macroeconomic data releases from the United States, the US Dollar Index struggled to retrace its losses and was last seen losing 0.35% on the day at 92.34.

Weekly initial jobless claims in the U.S. came in at 245K, matching previous week's reading, and the international trade deficit rose to $69.68 billion, surpassing the market estimate of $67.7 billion. A separate report on Thursday showed that the Chicago PMI improved to its best level in more than six years at 67.6 in December, easily beating the experts' expectation of 62.

Meanwhile, after closing the previous day with small gains, major equity indexes in the U.S. started the day on in a mixed manner, suggesting that the market sentiment remains neutral. The Dow Jones Industrial Average was gaining 0.15% and the S&P 500 losing 0.05% at the time of writing.

Technical outlook

Both the CCI and the RSI indicators on the daily chart is showing overbought conditions for the pair, pointing to a potential technical correction ahead of the next leg up. $1300 (psychological level) is a critical resistance for the pair and a daily close above that level could open the door to $1306 (Oct. 16 high) and $1313 (Sep. 29 high). On the downside, supports could be seen at $1286 (daily low), $1272 (50-DMA/200-DMA) and $1265 (Dec. 22 low).

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