Gold pares daily losses, $1270 on sight

Eren Sengezer FXStreet

After refreshing its two-week low against the USD at $1260, the precious metal made a sharp u-turn and moved back into the positive area amid a USD sell-off. At the moment, the XAU/USD pair is trading at $1266.50, up 0.2% on the day.

Despite the sharp drop and the following quick recovery following the tax plan declaration, the XAU/USD remains in a relatively narrow $8 trading range between $1260 and $1268 on Wednesday. The fact that the three major equity indexes in the U.S. have been able to hold on to their daily winnings make it difficult for the safe haven Gold to find demand. In addition, the greenback seems to be able to fend off the selling pressure as the US Dollar Index is recovering back towards 99. As of writing, the index was up 0.25% at 98.95.

Full summary of Trump's tax plan

The next catalyst for the XAU/USD could come in during the early hours of the European session when the BoJ press conference gets under way. Although this event is not directly related to Gold, potential sharp fluctuations in the USD/JPY pair could determine a direction for the DXY, thus impacting the price action of XAUUSD.

Technical outlook

The initial support for the pair could be encountered at $1260 (daily low), ahead of $1248 (50-DMA) and $1240 (200-DMA). To the upside, resistances align at $1271 (20-DMA), $1288 (Apr. 21 high) and $1295 (Apr. 17 high).

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.

EUR/USD looks weak below 1.1800

EUR/USD has slipped back under pressure, breaking through the 1.1800 support and drifting towards the weekly lows near 1.1770 ahead of the opening bell in Asia. The move reflects renewed strength in the US Dollar, with steady geopolitical tensions keeping its demand firm. Moving forward, the release of the German labour market report and flash inflation figures should keep European investors entertained on Friday.

GBP/USD threatens the 200-day SMA near 1.3440

GBP/USD rapidly leaves behind Wednesday’s strong advance, coming under heavy pressure and retesting the 1.3440 zone, where the critical 200-day SMA is located. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold trims gains, slips back to around $5,170

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The yellow metal surrenders part of its earlier gains on the back of the resurgence of the buying interest in the Greenback. In the meantime, geopolitical tensions in the Middle East continue to limit the downside potential for now.