Gold rises above $1230 as US Dollar loses traction
- Gold advances to daily tops above $1230 ahead of US data.
- US Dollar Index struggles to extend higher above 94.50.
- Wall Street stays mixed in pre-market trading.
The XAU/USD pair spent the Asian session moving in a very tight range near the $1225 handle and started to gather momentum in the second half of the day with the greenback struggling to find demand. The pair recently broke above the $1230 mark and was last seen trading at a new fresh session high of $1233, where it was up $9, or 0.7%, on the day.
The US Dollar Index, which stayed relatively quiet and closed flat on Tuesday, hung out near mid-94s for the majority of the day and came under a modest selling pressure ahead of the low-tier macroeconomic data releases from the United States. New home sales change is expected to come in at -2.8% in June following May's 6.7% expansion. Later in the session, headlines from Trump-Juncker trade summit could be the next significant catalyst for the pair as it could impact the market sentiment.
Furthermore, European indices are suggesting a low risk appetite on the day, helping the safe-haven gold stay strong. As of writing, Germany's DAX and the UK's FTSE are down 0.7% and 0.8% respectively. Although major equity indexes in the U.S. are are trading mixed ahead of the opening bell, European stocks' dismal performance is likely to weigh on Wall Street and provide an additional boost to the pair.
Technical outlook
The pair could face the first resistance at $1235 (Jul. 23 high) ahead of $1242 (20-DMA) and $1249 (Jul. 12 high). On the downside, supports align at $1222 (Jul. 23 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.
