Gold advances to daily highs near $1310 as DXY slumps to 96.30 area

• The selling pressure surrounding the USD remains intact on Tuesday.
• European stocks post strong gains.
• Coming up: Factory orders from the U.S.

After closing the previous day with small gains, the XAU/USD pair fluctuated in a tight range above the critical $1300 handle before gaining traction and advancing to a daily high of $1309 in the last hour. As of writing, the pair was trading at $1308, rising 0.35% on a daily basis.

The broad-based selling pressure surrounding the greenback since the start of the week seems to be fueling the pair’s advance on Tuesday. Ahead of the factory orders data in the NA session, the US Dollar Index is at its lowest level since March 1 at 96.35, erasing 0.18% on a daily basis. With investors waiting for the FOMC to publish its updated dot plot and announce monetary policy decisions on Wednesday, today’s data release is likely to be ignored.

Previewing tomorrow’s FOMC event, “We continue to think the Fed is done with rate hikes, but that it will maintain a modest tightening bias in its rate hike projections for as long as the economic outlook remains broadly positive,” said  Bill Diviney, senior economist at ABN AMRO.

Meanwhile, despite the ongoing uncertainty surrounding the Article 50 extension, major European equity indexes are posting decisive gains on Tuesday and reflecting a high appetite for risk-sensitive assets, hurting the demand for safe-havens such as the precious metal. At the moment, Germany’s DAX is up 0.9% on the day while the Euro Stoxx 50 is adding 0.72%.

Technical levels to watch for