Gold recovers from daily lows, trades above $1223 as Wall Street pares early gains
- Shifting market sentiment boosts the demand for safe-havens.
- US Dollar Index remains on track to close the day near 96.
Amid a lack of macroeconomic data releases that could impact the price action on Monday, the markets' risk perception stays as the primary driver of the XAU/USD pair. After falling to a daily low near $1220 in the early NA session, the pair staged a modest recovery in the last hour and was last seen trading near $1223, where it was down 0.3% on a daily basis.
Boosted by the gains seen in major European indices, Wall Street started the day on a positive note. However, dragged by sharp drops witnessed and the financial and energy shares, the market mood changed and forced both the Dow Jones Industrial Average and the S&P 500 indexes turn negative on the day. At the moment, these indexes are down 0.4% and 0.5%, respectively. On the other hand, the strong performance of technology shares keeps the tech-heavy Nasdaq Composite index in the green for the time being.
Despite the risk-off mood, however, the pair struggles to push higher as the greenback clings to its daily gains with the US Dollar Index staying quiet around 96, adding 0.4% on a daily basis. Although there were no fundamental catalysts that supported the buck on Monday, the selling interest surrounding the euro and the GBP allowed the USD to outperform its peers.
Technical outlook by FXStreet Chief Analyst Valeria Bednarik
The daily chart for spot gold shows that it held above its 100 DMA also above last week's low at 1,218.61, while the 20 DMA extended its advance below the larger one. In the same chart, technical indicators retreated modestly but remain close to overbought readings, with no clear directional strength.
Shorter term, and according to the 4 hours chart, the metal is at risk of falling further, as the metal broke below a still flat 20 SMA, while technical indicators entered negative ground. The downside potential will be stronger on a break below the mentioned weekly low.
Support levels: 1,218.60 - 1,208.20 - 1,195.25.
Resistance levels: 1,233.20 - 1,242.50 - 1,251.70.