Gold steadies above $1260 as DXY retreats back to 95 ahead of data

USD strength drags the XAU/USD to a fresh 2018 low.
Wall Street looks to open in the red.
Weekly jobless claims and Philly Fed Manufacturing Index will be next.

Eren Sengezer FXStreet

The XAU/USD pair plummeted to its lowest level in more than 6 months at $1261.79 earlier today but was able to limit its losses ahead of the macroeconomic data releases from the United States. As of writing, the pair was trading at 41263, still down $5, or 0.4%, on the day.

The selling pressure on Thursday seems to be a product of a stronger greenback. After losing its bullish momentum near the 95 handle in the last three days, the US Dollar Index made a decisive rise above that level to touch its best level in more than 11 months at 95.22. However, the index is now taking a breather and moving sideways near the 95 mark, where it was up 0.25% on a daily basis.

The macroeconomic calendar will feature the weekly jobless claims and the Philly Fed Manufacturing Survey from the United States. A faster-than-expected expansion in the manufacturing activity could help the buck start gathering strength against its rivals.

On the other hand, the precious metal seems to be finding some demand as a safe-haven as global major equity indexes stay under pressure. As of writing, Germany's DAX was down 0.8% and the UK's FTSE 100 was losing 0.6%. In pre-market trading, both the Dow Jones Industrial Average and the S&P 500 remain in the negative territory. A negative market sentiment in the remainder of the day could make help the pair limit its losses.

Technical outlook

The next short-term support for the pair could be seen at 41252.50 (Dec. 18 low) followed by $1243 (Dec. 8 low) and $1236 (Dec. 12 low). On the upside, resistances align at $1270 (daily high), $1276 (Jun. 20 high) and $1290 (20-DMA).

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.

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