Gold pulls away from 12-month lows, steadies near $1225

Following yesterday's sharp fall, the XAU/USD pair started the day on a negative note and extended its losses to its lowest level since July 2017 at $1220. However, with a fresh selling wave felt in the NA session, the pair retraced a portion of its daily losses and was last seen trading at $1225, where it was down 0.17% on the day.

The pair's price action seems to be driven by the greenback valuation on Wednesday. Earlier today, fueled by the losses witnessed in the EUR/USD and the GBP/USD pairs, the US Dollar Index rose above the 95 mark to renew its highest level since June 28. However, the index reversed its course in the last hours after the data from the U.S. showed a 12.3% and a 2.2% contraction in housing starts and building permits respectively. At the moment, the DXY is sticking to small daily gains moving sideways near 94.90.

In the meantime, the pair's recovery gains seem to stay limited as the relatively positive market sentiment in the second half of the day don't allow the demand for safe-havens to increase. As of writing, the Dow Jones Industrial Average was up 0.25% while the S&P 500 was adding 0.15%. 

Later in the session, the Fed is going to publish its Beige Book, which provides a broad picture of the health of the economy. Investors will be paying a close attention to any remarks regarding rising concerns over Trump administration's trade policy and the buck's reaction to the publication could be the next catalyst for the pair.

Technical outlook

Despite this recent recovery, both the CCI and the RSI indicators on the daily chart remain in the oversold territory, suggesting that the pair could extend its technical recovery before the next leg down. On the downside, the initial support aligns at $1220 (daily low), $1207 (Jul. 7, 2017, low) and $1200 (psychological level). On the upside, resistances align at $1230 (daily high), $1240 (Jul. 17 opening level) and $1248 (20-DMA).