Gold retraces daily losses, approaches $1280 as Wall Street extends fall

• Risk aversion  helps the precious metal find demand in the NA session.
• Major equity indexes in the U.S. record sharp losses.
• DXY consolidates daily gains as T-bond yields slump.

The troy ounce of the precious metal  renewed its lowest level of 2018 at $1270 earlier today before staging a modest recovery in the NA session. As of writing, the XAU/USD pair was trading at $1277, down $1.5 on the day.

In the first half of the day, the greenback strength became the primary driver of the price action. Following Monday’s technical correction, the US Dollar Index gained traction and came within a touching distance of the 95 handle before retracing a portion of its daily gains. In the second half of the day, risk aversion weighed on the US T-bond yields and made it difficult for the buck to preserve its bullish momentum. At the moment, the 10-year T-bond yield is down 1.7% on the day.

Reflecting the weak market sentiment, major equity indexes started the day in the red and continued to edge lower as concerns over a trade conflict between  the United States and the rest of the world keep the investors on edge. The Dow Jones Industrial Average and the S&P 500 indexes  are down 1.4% and 0.8% respectively.

Meanwhile, today’s data from the U.S. showed that housing starts increased by 5% in May while building permits contracted by 4.6%. There won’t be any other macroeconomic data releases in the remainder of the day, and the risk perception is likely to impact the pair’s price in the short-term.

Technical levels to consider

$1270 (daily low) is now aligned as the first short-term support ahead of $1265 (Dec. 22 low) and $1260 (Dec. 5 low). On the uıpside, resistances could be seen at $1284 (daily high), $1300 (psychological level) and $1308 (200-DMA).