Gold slumps to $1325 area ahead of Powell testimony

• The precious metal struggled to find demand for the second straight day.
• US Dollar Index stays in red below 96.50.
• Coming up: FOMC Chairman Powell’s testimony in Congress.

Following an uninspiring recovery attempt in the Asian trading hours, the XAU/USD pair met resistance near $1330 and moved into the negative territory. As of writing, the pair was down 0.2% on a daily basis at $1325.

Hopes of the U.S. – China trade conflict coming to an end amid President Trump’s optimistic remarks made it difficult for the precious metal to find demand as a safe haven this week. However, major European equity indexes today stay in the negative territory and the S&P 500 Futures is losing 0.2% to suggest that the risk-positive mooed is starting to lose its impact on the markets.

On the other hand, the US Dollar Index, which closed the previous day with small losses below 96.50, remains under a modest selling pressure today ahead of FOMC Chairman Powell’s testimony before the U.S. Congress later in the day. The only data from the U.S. so far showed that housing starts declined 11.2% in December and building permits rose by 0.3% in the same period. At the moment, the DXY is down 0.09% on the day at 96.32.

Technical levels to consider