Gold surpasses $1220 as DXY loses momentum above 94.50
- US Dollar Index stays in the positive territory near mid-94s.
- Higher risk appetite boosts US stocks on Tuesday.
The XAU/USD pair gained traction in the last hour and turned positive on the day above the $1220 handle as the greenback struggled to preserve its bullish momentum. As of writing, the pair was trading a little above $1223, adding 0.2% on the day.
Today's data from the U.S. showed that the personal spending and personal income both increased by 0.4% in June. On the other hand, the annual core-PCE Price Index, the Fed's preferred gauge of inflation, came in at 1.9% to miss the market expectation of 2%. Nonetheless, the CME Group FedWatch Tool's rate hikes were virtually unchanged following the data releases to suggest that investors assessed today's data as good enough to allow the Fed to make two more rate hikes this year.
After dropping to 94.16, the US Dollar Index quickly gathered strength and retraced all of its daily losses. However, the index lost its traction near the 94.60 mark as investors didn't want to make any long-term bets ahead of tomorrow's FOMC announcements.
On the other hand, Wall Street started the day on a positive note after Bloomberg claimed that American and Chinese officials were planning to meet this week to avoid a trade war. The improved market sentiment in the session could make it difficult for the precious metal to continue to rise against the buck.
Technical outlook
The pair could face the initial resistance at $1232 (20-DMA) ahead of $1244 (Jul. 17 high) and $1249 (Jul. 12 high). On the downside, supports align at $1217 (Jul. 27 low), $1211 (jul. 19 low) and $1200 (psychological level).
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.
