Gold clings to modest gains near $1310 ahead of US PMI data

• 10-year US T-bond yield drops to lowest level since December 2017.
• US Dollar Index stays in green above 96.50.
• Wall Street looks to open in the negative territory.

Despite the broad-based USD strength on Friday, the XAU/USD pair rose to a daily high near $1314 and started to move sideways ahead of the PMI data from the United States. As of writing, the pair is trading at $1311.50, adding 0.16% on a daily basis.

After the Fed’s dot plot showed that the FOMC was expecting no rate hikes in 2019, the U.S. 10-year T-bond yield recorded sharp losses and extended its slide on Friday to touch its lowest level since last week of 2017 at 2.471% by losing nearly 2.5% on a daily basis. The traditional safe-havens such as gold and the JPY gathered strength with the risk-aversion staying as the main theme of the market.

On the other hand, regardless of the Fed’s dovish shift and the fall in T-bond yields, the greenback continues to outperform with its European major rivals struggling to find demand amid disappointing macroeconomic data releases from the euro area and the Brexit uncertainty.  

The IHS Markit will release the preliminary Manufacturing and Services PMI report later in the session and positive readings could provide an additional boost to the dollar to keep the pair’s gains limited.

Technical levels to consider

The pair could face the initial support at $1309.50 (50-DMA) ahead of $1300 (psychological level/20-DMA) and $1293 (Mar. 14 low). On the upside, resistances are located at $1314 (daily high), $1320 (Mar. 21 high) and $1327 (Feb. 28 high).