Gold struggles to gain traction above $1280 despite broad USD weakness

The XAU/USD pair took advantage of the strong selling pressure surrounding the greenback in the early NA session and climbed to a daily high near $1285 before erasing its daily gains. As of writing, the pair was down 0.2% on a daily basis at $1281.

Although the greenback earlier in the day turned north and retraced a small portion of its daily losses after the ADP employment report showed a much larger than expected growth in private sector employment in April, the disappointing PMI data didn't allow the currency to gather further strength. The US Dollar Index, which touched a 10-day low of 97.27, was last seen at 97.31, down 0.21% on the day.

The Institue for Supply Management today revealed that the manufacturing sector lost momentum in April with the headline PMI dropping to 52.8 from 55.3 and missing the market expectation of 55. 

Meanwhile, supported by the upbeat tone in Apple's latest earnings reports, Wall Street opened in the positive territory on Wednesday to point to a positive market sentiment that makes it difficult for the precious metal to stay resilient against the dollar. 

Later in the session, the FOMC's monetary policy statement and Chairman Powell's press conference will be watched closely by the participants. 

Previewing the event, "We have no strong reason to expect the FOMC to move the market; although we can’t be sure how Powell will play it at his press conference.  President Trump has pushed again for rate cuts on the eve of the FOMC, and Powell will be certain to field questions on the President’s call for lower rates,” AmpGFX analysts said.

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Technical levels