Gold touches fresh 2018 lows below $1243

USD strength drags the XAU/USD pair lower on Monday.
DXY consolidates daily gains below the 95 mark.
PMI data from the U.S. points to a healthy manufacturing sector.

Eren Sengezer FXStreet

The XAU/USD pair, which erased last Friday's recovery gains during the first half of the day on Monday, came under a renewed selling pressure during in the first trading hours of the NA session and touched its lowest level of 2018 at $1242.60. At the moment, the troy ounce of the precious metal is trading at $1243.35, losing a little over $9, or 0.75% on the day.

Today's data from the United States showed that the business activity in the manufacturing sector continued to expand at a faster-than-expected pace in June. The Markit PMI improved to 55.4 in its final reading from 54.6 and the ISM PMI advanced to 60.2 from 58.7 to beat the market expectation of 58.1. The upbeat data lifted the US Dollar Index to a fresh session high at 94.88 and the index was last seen at 94.80, where it was up 0.6% on the day.

On the other hand, Wall Street started the week lower as concerns over Trump administration's trade policy stay at the back of investors' mind. Although gold has been having a difficult time finding demand as a safe-haven since it broke below the $1300 mark, a risk-off mood could help the pair limit the losses in the short-term.

Technical outlook

The CCI indicator on the daily chart turned south before recovering above the -100 mark, suggesting that sellers remain in control of the price action. On the downside, supports align at $1240 (Dec. 13, 2017, low), $1233 (Jul. 18, 2017, low) and $1220 (Jul. 6, 2017, low). Resistances are located at $1253 (daily high), $1260 (Jun. 27 high) and $1272 (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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