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  • Improved market sentiment weighs on the precious metal.
  • Wall Street starts the week on a positive note.
  • US Dollar Index rises above 97 in the NA session.

The XAU/USD pair failed to preserve its modest daily gains on Monday and fell to a daily low near $1222 in the last hour as the higher risk appetite made it difficult for safe-havens to find demand. As of writing, the pair was trading at $1222.50, losing 0.05% on a daily basis.

Reports of Italy looking to reduce its deficit target to appease the EU and the EU27 approving the Brexit deal helped European stocks to gain  traction on Monday. Boosted by the improved sentiment, Wall Street opened the day higher to suggest that the risk-on mood carried over into the NA session. At the moment, the Dow Jones Industrial Average and the S&P 500 were up 1.25%  and 1.3%, respectively. Additionally, US T-bond yields rose on Monday to help USD gather strength.

Although the Dallas Fed’s data today showed that the business activity in the regional manufacturing sector expanded at a much slower pace than expected in November, the US Dollar Index rose above the 97 mark to make it difficult for the XAU/USD pair to recover its losses. As of writing, the DXY was up 0.05% on the day at 97.

There won’t be any other macroeconomic data releases from the U.S. in the remainder of the day and risk perception is likely to stay as the sole driver of the pair’s price action.

Technical levels to consider

The pair could face the first support at $1218 (50-DMA) ahead of $1207 (Nov. 9 low) and $1200 (psychological level/Nov. 12 low). On the upside, resistances are located at $1228 (daily high), $1236 (Nov. 7 high) and $1243 (Oct. 26 high).