Gold falls to new monthly lows near $1207 as US Dollar Index rises above 97

  • Broad-based USD strength weighs on XAU/USD on Friday.
  • US Dollar Index extends rally to fresh weekly high above 97.
  • Precious metal looks to close the week more than $25 lower.

The XAU/USD came under a heavy selling pressure in the NA session and fell to its lowest level since October 11 at $1206.83. As of writing, the troy ounce of the precious metal was trading at $1208.70, losing nearly $15, or 1.2%, on a daily basis.

The pair's recent drop seems to be a product of a strengthening greenback. The US Dollar Index, which recorded losses earlier in the week with the initial market reaction to the results of the midterm elections in the U.S., reversed its course on Thursday following the Fed's monetary policy announcements and preserved its momentum on Friday. With major European currencies such as the euro and the pound weakening sharply against the buck, the index reached its highest level in a week at 97.01 and was last seen at 96.98, adding 0.35 on the day.

Earlier today, the data from the U.S. showed that the PPI rose 0.6% and 2.9% on a monthly and yearly basis, respectively, to beat the experts' estimates. Additionally, the Uom's consumer confidence index came in at 98.3 compared to the market expectation of 98. "Income expectations have improved and consumers anticipate continued robust growth in employment, but consumers also anticipate rising inflation and higher interest rates," the UoM said in its publication.

Technical levels to consider

Supports for the pair are located at $1200 (psychological level), $1195 (Oct. 3 low) and $1188 (Oct. 2 low). On the upside, the initial resistance aligns at $1212 (50-DMA) ahead of $1223 (daily high) and $1236 (Nov. 7 high).

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