Gold edges lower toward $1240 to turn flat on the day

• Wall Street starts the day mixed on Monday.
• US Dollar Index remains in the red near 94.20.
• US 10-year T-bond yield adds more than 1%.

After erasing a little over $15, the troy ounce of the precious metal gathered strength and rose to $1245 before losing its traction in the second half of the day. As of writing, the pair was trading at $1241, virtually unchanged on the day.

The pair’s price action on Monday seems to be driven by the greenback valuation. The US Dollar Index, which recorded modest gains to close the previous week near mid-94s, extended its downward correction to a fresh session low at 94.15. Although the index recovered some of its losses following the macroeconomic data releases from the United States it failed to preserve its momentum and was last seen at 94.20, where it was down 0.25% on the day.

Retail sales in the U.S. increased by 0.5% in June following May’s 1.3% growth and met the market expectations. On the other hand, the Empire State Manufacturing Index released by the Federal Reserve Bank of New York retreated to 22.6 in July from 25 in June but beat the experts’ estimate of 22.

Although the greenback is having a hard time finding demand, the pair’s upside remains capped as the rising T-bond yields weigh on the traditional safe-havens such as gold. At the moment, the 10-year T-bond yield is up 1.22% at 2.866% while major equity indexes in the United States fluctuate in a tight range near their opening levels.

Technical levels to consider

A decisive break above $1245 (daily high) could open the door to $1252 (20-DMA) ahead of $1265 (Jul. 9 high). On the downside, supports could be seen at $1240 (Jul. 2 low/daily low), $1234 (200-WMA) and $1228 (Jul. 16, 2017, low).