Gold consolidates daily gains below $1330 as US stocks extend rally

  • Wall Street starts the last day of the week higher.
  • Core-CPI comes in slightly above market expectations.
  • DXY looks to close the week at multi-month lows.

After rising to its highest level in nearly four months at $1333, the XAU/USD pair started consolidating its daily gains as the ongoing rally of the major equity indexes in the U.S. weighed on the demand for traditional safe-havens. As of writing, the pair was trading at $1328, adding nearly $6, or 45%, on the day.

The pair's upsurge on Friday was fueled by a broad-based selling pressure witnessed on the greenback. Following its sharp drop toward the critical 91 handle, the US Dollar Index finally seems to have stabilized as the macroeconomic data from the U.S. supported the view of the Fed hiking rates at least three more times in 2018. The inflation, measured by the core-CPI, increased by 0.3% and 1.8% on a monthly and yearly basis respectively, both readings coming in better than the market expectations. At the moment, the DXY is at 91.08, down 0.62% on the day.

On the other hand, the pair's gains are being capped by an improving market sentiment in the NA session. Following a 2-day slide earlier this week, Wall Street regained its momentum on Thursday and opened higher on Friday. As of writing, the Dox Jones Industrial Average and the S&P 500 were at fresh record highs by rising 0.62% and 0.32%.

Technical outlook

With today's rise, both the CCI and the RSI indicators on the daily chart moved into the overbought territory, suggesting that the pair could make a technical correction before the next leg up. The first technical resistance for the pair could be seen at $1333/34 (daily high/Sep. 14 high) ahead of $1344 (Sep. 5 high) and $1350 (Sep. 7 high). On the downside, supports are located at $1310 (Jan. 10 low), $1300 (psychological level) and $1294 (Dec. 29 low).

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