Gold pulls away from 2-week highs, inches closer to $1220
- Broad-based USD strength weighs on XAU/USD on Tuesday.
- Risk aversion helps gold limit its losses.
- Wall Street recovers modestly after starting the day sharply lowers.
After advancing to its highest level in two weeks near $1229, the XAU/USD pair changed its direction in the NA session and erased all of its daily losses on its way to a new session low of $1220.75. As of writing, the pair was down around $1 on the day at $1223.
The pair's recent fall seems to be caused by the broad-based USD strength witnessed in the second half of the day. Ongoing political drama in the UK and the uncertainty surrounding the Italian budget crisis forced European currencies to weaken and boosted the demand for the greenback. The US Dollar Index, which fell to its worst level since November 6 at $96.04 earlier today, retraced its 2-day drop and rose to 96.63 before going into a consolidation phase. At the moment, the index is up 0.37% on the day at 96.53.
On the other hand, the flight-to-safety as reflected by another round of heavy sell-off on Wall Street helped the precious metal limit its losses. Although major equity indexes in the U.S. try to stage a rebound in the last hours, the Dow Jones Industrial Average and the S&P 500 indexes are still down 0.83% and 0.45%, respectively.
There won't be any macroeconomic data releases from the U.S. in the remainder of the day and markets' risk perception could drive the pair's price action.
Technical levels to consider
The initial support for the pair aligns at $1215 (50-DMA) ahead of $1206 (Nov. 9 low) and $1200 (psychological level). On the upside, resistances are located at $1229 (daily high), $1236 /Nov. 7 high) and $1243 (Oct. 26 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.
