- US Dollar Index plunges to 96 area in the early NA session.
- Wall Street opens higher to limit the pair’s gains.
After spending a large part of the day in a narrow band above the $1280 handle, the XAU/USD pair gained traction on broad-based USD weakness and rose to its highest level since January 17 at $1295. As of writing, the troy ounce of the precious metal was trading at $1294.30, adding 1% on a daily basis.
Earlier today, the Wall Street Journal reported that Fed officials were considering an early end to the balance sheet reduction scheme. Although the initial market reaction was relatively muted, American investors seem to be pricing a more dovish Fed at the moment. The US Dollar Index, which rose to its highest level in more than 3 weeks above 96.50 on Thursday, was last down 0.53% on a daily basis at 96.06.
Meanwhile, today’s risk-positive environment and the above mentioned Fed headlines provided an early boost to stock markets on Friday. With all three major indexes of Wall Street adding nearly 1% in the first hour of trading, safe-havens struggle to attract markets’ interest and caps the XAU/USD pair’s gains for now. However, if the bearish pressure surrounding the buck remains intact, we could see the pair try to push higher later in the day.
Technical levels to consider
The initial resistance for the pair aligns at $1300 (psychological level/Jan. 4 high) ahead of $1309 (Jun. 14, 2018, high) and $1315 (May 15, 2018, high). On the downside, supports could be seen at $1288 (20-DMA), $1280 (daily low) and $1276 (Jan. 24 low). With today’s upsurge, the CCI indicator on the daily chart rose above the 0 mark, suggesting that buyers are looking to take control of the price action.
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