- Wall Street gains traction in early trade.
- Rising T-bond yields help greenback stay above 96.
The XAU/USD pair came under heavy selling pressure in the last hour and dropped below the $1280 mark as the precious metal struggled to find demand as a safe-haven in the risk-positive environment. As of writing, the pair was down nearly $6 on the day at $1279.50.
After suffering heavy losses on Tuesday, strong earnings figures from tech giant IBM and United Technologies boosted major equity indexes in the U.S. on Wednesday and allow them to start the day sharply higher to confirm the improved sentiment. As of writing, the Dow Jones Industrial Average was up more than 1% on the day while the S&P 500 was adding 0.7%.
Meanwhile, on the back of a 1.4% increase in the 10-year T-bond yield, the US Dollar Index easily recovered its early losses and rose above the 96.30 mark in the last hour reflecting a broad-based USD strength, which puts additional bearish pressure on the pair. The data from the U.S. today showed that house prices increased by 0.4% in November to surpass the market expectation of 0.3%.
The market’s risk perception in the remainder of the day could stay as the primary driver of the pair’s price action in the absence of significant macroeconomic data releases from the U.S.
Technical levels to consider
The pair could face the initial support at $1276 (Jan. 21/Jan. 4 low) ahead of $1266 (Dec. 27, 2018, low) and $1262 (50-DMA). On the upside, resistances are located at $1286 (daily high/20-DMA), $1292 (Jan. 18 high) and $1300 (psychological level).
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