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  • Gold prices fall sharply after breaking below $1,700 on Wednesday.
  • Broad-based USD strength weighs on the XAU/USD pair.
  • Risk positive market environment makes it tough for gold to find demand.

The troy ounce of the precious metal posted modest gains on Monday and Tuesday but struggled to preserve its bullish momentum. After moving sideways a little above the $1,700 handle on Wednesday, the XAU/USD pair turned south and dropped to a daily low of $1,684. As of writing, the pair was down 1% on the day at $1,689.

USD continues to gather strength

The selling pressure surrounding the major European currencies, especially the EUR and the GBP, allowed the greenback to continue to find demand on Wednesday. Reflecting the USD strength, the US Dollar Index is rising for the third straight day and was last seen adding 0.3% on the day at 100.12.

Earlier in the day, the data published by the ADP Research Institue revealed that the private sector employment in April plunged by 20.2 million in April but was largely ignored by the market participants.

Meanwhile, major equity indexes are pushing higher as investors are cheering the economy’s reopening prospects. Reflecting the upbeat market mood, which dampens the demand for safe-haven gold, the S&P 500 and the Nasdaq Composite indexes are up 0.3% and 1.25%, respectively.

During the Asian trading hours on Thursday, investors will be keeping a close eye on Caixin Services PMI and Trade Balance data from China.

Technical levels to watch for