Gold consolidates Tuesday's gains, remains in red ahead of FOMC

  • Gold retraces a small part of yesterday's gains.
  • Wall Street starts the day on a positive note.
  • DXY edges higher toward 92 on upbeat data.

After closing eight straight days with robust gains, the XAU/USD pair lost traction on Wednesday and pulled away from the highest level since mid-September that was set at $1321 yesterday. As of writing, the pair was trading at $1316.70, down 0.07% on the day.

The US Dollar Index in the first half of the NA session advanced to a fresh daily high at 91.95 after the Manufacturing PMI data released by the ISM came in at 59.7 in December, surpassing the market estimate of 58.1. Moreover, construction spending in the United States increased by 0.8% on a monthly basis in November. The next significant catalyst for the buck will come in later in the session when the FOMC releases the minutes of its December meeting, at which the committee decided to hike the policy rate by 25 basis points.

Meanwhile, major equity indexes in the U.S. started the day higher and preserved their bullish momentum with both the S&P 500 and Nasdaq Composite indexes reaching fresh all-time highs. At the moment, these indexes were up 0.5% and 0.7% respectively. The safe-haven precious metal could struggle to show resilience against the greenback if the positive market sentiment persists in the remainder of the day.

Technical levels to consider

Despite today's corrective slide, the RSI indicator on the daily chart stays above the 70 mark, suggesting that the correction is not over yet. The immediate resistance for the pair aligns at $1321 (Jan. 2 high) ahead of $1334 (Sep. 14 high) and $1344 (Sep. 5 high). On the downside, supports could be seen at $1300 (psychological level), $1294 (Dec. 29 low) and $1286 (Dec. 28 low). 

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