Gold continues to hold above $1200 ahead of Powell speech

• Gold retreats from weekly highs, buyers continue to defend critical $1200 handle.
• The US Dollar Index stays above 95.50 on upbeat data.
• Wall Street starts the day higher on Wednesday.

The XAU/USD pair advanced to a fresh weekly high near $1208 earlier today  but struggled to preserve its momentum and erased its daily gains. As of writing, the pair was virtually unchanged on the day at $1203.

A stronger greenback combined with an improved market sentiment on Wednesday makes it difficult for the precious metal to gather strength. Today’s data from the U.S. showed that the ADP’s private sector employment growth at 230K in September surpassed the analysts’ estimate of 185K. Furthermore, the ISM’s non-manufacturing PMI improved to its highest level in nearly two decades at 61.6 to show that the service sector continues to expand at a robust pace.

Commenting on the data,  “The healthy growth in ADP  employment will keep expectations intact for a robust September employment report on Friday with expectations reaching beyond the 188,000 consensus forecast,” FXStreet Senior Analyst Joseph Trevisani said. Supported by the upbeat data, the US Dollar Index stays near 95.60 with a 0.14% gain on a daily basis.

In the meantime, Wall Street started the day on a positive note to further weaken the demand for safe-havens. At the moment, the Dow Jones Industrial Average was up 0.6% while the S&P 500 was adding 0.45%.

Later in the session, FOMC members Brainard and Mester, and Chairman Powell are scheduled to deliver speeches.

Technical levels to consider

With a daily close below $1200 (psychological level), the pair could extend its losses toward $1188 (Oct. 2 low) and $1180 (Sep. 28 low). On the upside, resistances are located at $1208 (daily high), $1214 (Aug. 28 high) and $1224   (Aug. 1 high).