Gold rises above $1270 as US Stocks drift lower

The XAU/USD pair gained traction in the NA session and advanced to its best level since December 5 at $1275. As of writing, the pair was trading at $1274, adding $7.5, or 0.6% on the day.

Today's data from the U.S. showed that the core-PCE price index, the Fed's favorite gauge of inflation, rose to 1.8% from 1.6% on a yearly basis in November, inching closer to the Fed's 2% policy target. Other data revealed that durable goods orders in November increased by 1.4% following October's 0.4% contraction but failed to meet the market expectation of 2%. Meanwhile, the final reading of University of Michigan's Consumer Sentiment Index eased to 95.9 from 96.8.

The DXY's reaction to the mixed macroeconomic data was relatively subdued as the trading volume continues to thin out ahead of the Christmas break. At the moment, the index is up 0.2% at 93.03.

On the other hand, following yesterday's relatively robust rally, major equity indexes in the U.S. struggled to extend their gains as participants are looking to book their profits on the last day of the week. The Dow Jones Industrial Average and the S&P 500 indexes are down 0.1% and 0.15% respectively, allowing the risk-sensitive gold to gather strength against currencies.

Technical outlook

With today's upsurge, the pair rose above the critical 200-DMA and a weekly close above that level could open the door for further gains in the short term. The RSI indicator on the daily chart is also moving north above the 50 mark, suggesting that the bullish momentum is gathering strength. $1277 (Dec. 4 high) could be seen as the initial resistance ahead of $1290 (Dec. 1 high) and $1300 (psychological level). On the downside, $1271 (200-DMA) is now seen as a critical support followed by $1261 (20-DMA) and $1252 (Dec. 28 low).