Gold clings to gains above $1260 on modest USD weakness

Holiday trading doesn't allow for sharp movements.
US Dollar Index stays in red below the 97 mark.
Wall Street to close early on Monday.

Eren Sengezer FXStreet

The troy ounce of the precious metal added more than $20 last week and brought the total monthly gains of December over $40. With markets already going into the holiday mood, the XAU/USD pair is trading in a relatively tight range on Monday. As of writing, the pair was up 0.5% on the day at $1262.

The sharp sell-off witnessed in the stock markets in the second half of the week following the FOMC's announcements and Chairman Powell's hawkish comments, pushed investors toward safer assets such as the JPY and gold. Major equity indexes in the U.S. suffered heavy losses last Friday and recorded their lowest weekly close of the year. Although stock markets are expected to stay calm, investors will be paying close attention to the risk sentiment ahead of the new year.

On the other hand, the US Dollar ındex failed to break above the critical 97 mark and stayed under a modest pressure on Monday to provide an additional boost to the pair. At the moment, the DXY is down 0.2% on the day at 96.75. In about 20 minutes, Chicago Fed will release its National Activity Index and there won't be any other macroeconomic data releases from the U.S.

Technical outlook

Gold Forecast 2019: Focus on US real interest rates

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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