Gold fails to hold above $1270 as greenback makes a modest recovery
The ounce troy of the precious metal retraced its gains against the greenback in the last hour with the XAU/USD pair easing back below the $1270 mark. As of writing, the pair was trading at $1269.50, still up $0.55, or 0.05%, on the day.
Earlier in the session, the pair was able to rise to its session high at $1272.87 amid a broad-based greenback sell-off. Although today's data failed to put pressure on the greenback, the US Dollar Index struggled to preserve its recovery gains after Cleveland Fed President Mester crossed the wires. After plummeting to a fresh 15-month low, the DXY started a modest recovery move and is now at 92.65, still down 0.3% on the day.
- US Dollar Index tumbles to 92.35, fresh 1-year low
Mester didn't offer anything surprising to the markets as she reiterated the FOMC's view on the inflation outlook by saying that the recent softness was seen as temporary. However, she also argued that the reduction in bond holdings, which is expected to start 'relatively soon', wouldn't have a big impact on the markets.
- Fed's Mester: Factors in place for rise in US inflation
- Fed's Mester: May take couple months to see uptick in U.S. prices
On the other hand, the risk appetite remains dominant on Wednesday, keeping the investors away from traditional safe-havens like the precious metal. At the moment, the Dow Jones Industrial Average is up more than 50 pips and is above the 22K threshold while the S&P 500, which stayed in the red during the first half of the session, is up 0.03%.
Technical outlook
Since the start of the week, the pair is trading in a relatively narrow $12 range as the greenback weakness seems to be offset by the improved risk sentiment. Short-term indicators also signal a neutral outlook. $1274 (May 31 high) could be seen as the first technical resistance for the pair ahead of $1280 (Jun. 14 high) and $1288 (Jun. 8 high). On the downside, supports are located at $1266 (Jul. 31 low), $1259 (Jul. 18 low) and $1248 (50-DMA).