Gold eases off highs, sticks to modest gains near $1340
- Gold extends gains on Monday, finds resistance ahead of $1350
- Gold is up nearly $40 in January.
- USD weakness remains as the central theme in FX space.
The XAU/USD pair advanced to its highest level in four months at $1345 before losing its momentum in the second half of the day. As of writing, the pair is trading at $1340.75, up nearly $3, or 0.23% on the day.
With a lack of fresh fundamental catalysts that could impact the trading action on Monday, the selling pressure surrounding the buck stayed as the primary driver. After closing the previous week at a fresh 3-year low, the US Dollar Index didn't waste any time extending its losses and dropped to 90.05 earlier in the day. However, as the trading volume started to thin out due to MLK Day holiday in the U.S., the index started to retrace its daily drop and was last seen at 90.26, where it was still losing 0.4% on the day.
Moreover, the CCI and the RSI indicators on the daily graph both show overbought conditions for the pair, which could be taken as a sign that buyers might be willing to move to the sidelines and wait for a technical correction before adding on to their long positions.
Technical levels to consider
The initial resistance for the pair could be seen at $1344/45 (Sep. 5 high/daily high) ahead of $1350 (Sep. 7 high) and $1358 (Sep. 8 high). On the downside, supports are located at $1322 (Jan. 12 low), $1310 (Jan. 10 low) and $1300 (psychological level).