Gold recovers from daily lows, looks to close the day flat above $1280

• Wall Street pares early gains on Wednesday.
• Souring market sentiment helps the precious metal find demand.  
• US Dollar Index looks to close third straight day in the red.

The XAU/USD pair dipped below the $1280 in the early NA session after Wall Street rebounded strongly in the early to trade to make it difficult for safe-havens to grab investors’ attention. However, with the market sentiment turning sour in the last few hours and the greenback weakening against its major rivals, the pair staged a modest recovery and was last seen virtually unchanged on the day at $1285.

As of writing, both the S&P 500 and the Nasdaq Composite were down around 0.25% on the day while the Dow Jones Industrial Average was clinging to small gains after rising more than 1% in the first hour of trading. Concerns over the U.S. – China trade conflict and the cautious tone regarding the global economic outlook in Davos seem to be keeping investors from taking a sigh of relief.

Meanwhile, the upbeat performance of major European currencies in the second half of the day weighed on the greenback and forced the US Dollar Index to suffer heavy losses after closing the previous two days with small losses. At the moment, the DXY is losing 0.22% on the day at 96.08.

Technical levels to consider