Gold clings to modest daily gains above $1310

US Dollar Index breaks above 96 in the NA session.
Sharp fall in T-bond yields helps the pair stay in the green.
Non-manufacturing PMI from the U.S. comes in slightly below expectations.

Eren Sengezer FXStreet

The XAU/USD pair slumped to the $1310 area in the European morning and posted modest gains after finding support there. Following an upsurge to the $1317 area in the early NA session, the pair lost its traction and was last up 0.25% on the day at $1315.

Despite the decisive rally witnessed in the US Dollar Index, the pair doesn't have a difficult time staying in the positive territory on Tuesday supported by a sharp fall seen in the 10-year US T-bond yield.

With major European currencies staying under a heavy selling pressure today, the greenback continued to gather strength and the DXY rose to an 11-day high of 96.10. However, the latest ISM Non-Manufacturing and Markit Services PMI falling short of analysts' estimates, the index erased a small part of its recent advance and was last up 0.22% on the day at 96.05.

US: Markit Services PMI falls to 54.2 in January from 54.4 in December.
US: ISM Non-Manufacturing PMI drops to 56.7 in January vs 57.2 expected.

Meanwhile, major equity indexes in the U.S. started the day in the positive territory and pushed higher in the early trade to point to positive market sentiment, which contradicts with the more-than-1% drop in the 10-year T-bond yield.

Technical outlook

Despite today's modest rise, the CCI indicator on the daily chart moves sideways below the 100 mark, suggesting that buyers are not trying to take control of the price action for the time being. Resistances for the pair could be seen at $1317 (daily high) ahead of $1326 (Jan. 31 high) and $1332 (Apr. 24, 2018, high). On the downside, supports are located at $1308 (Feb. 4 low), $1300/$1299 (psychological level/20-DMA) and $1288 (Jan. 17 low).

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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