Gold edges lower toward $1330 as DXY advances to mid-90s
- DXY stages a technical recovery following the 4-day drop.
- Positive market sentiment weighs demand for safe-havens.
After advancing to a fresh four-month high at $1344 on Monday, the XAU/USD pair reversed course on Tuesday and erased yesterday's gains. As of writing, the pair was trading at $1332, losing $7, or 0.55%.
Following four straight negative daily closings, the US Dollar Index gained traction on Tuesday with trading volume returning to normal levels after the long weekend in the United States. At the moment, the DXY is up 0.45% on the day at 90.53. However, today's recovery seems to be a technical correction with a lack of fundamental catalysts supporting that move. In fact, today's data from the U.S. showed that the Empire State Manufacturing Index eased to 17.7 in January and fell short of the market expectation of 18.
Meanwhile, the solid performance of global equity indexes doesn't allow the traditional safe-haven gold to show any resilience against the buck. The Nikkei 225 closed the day 1% higher while German DAX was up 0.9% as of writing. In case Wall Street starts the day on a positive note, we could see the bearish pressure building up in the next hours.
Technical outlook
The pair could face the first technical support at $1322 (Jan. 12 low) ahead of $1308 (Jan. 10 low) and $1300 (psychological level). On the upside, resistances align at $1344/45 (Sep. 5 high/Jan. 15 high), $1350 (Sep. 7 high) and $1358 (Sep. 8 high).