- XAU/USD finds support near $1250 on Thursday.
- Wall Street remains in the positive territory.
- US Dollar Index stays quiet above 94 ahead of FOMC minutes.
The XAU/USD pair recorded gains for the second straight day on Wednesday but lost its momentum as the improved market sentiment hurt the demand for the precious metal, which is seen as a safe asset. After easing down toward the $1250 area, the pair encountered support and erased its daily losses to turn flat near $1257, where it is moving sideways now.
With investors coming back from the Independence Day holiday, major equity indexes in the United States started the day on a positive note and preserved their bullish momentum. As of writing, the Dow Jones Industrial Average and the S&P 500 were up 0.7% and 0.75% respectively.
Meanwhile, following the mixed macroeconomic data releases from the United States, the US Dollar Index failed to retrace its daily fall as investors took a back seat ahead of the FOMC minutes. According to the ADP data, the private sector employment increased by less than anticipated in June while both the ISM and Markit PMI revealed that the activity in the service sector expanded at a faster pace than expected.
It will be interesting to see the FOMC’s view on Trump administration’s trade policy. A cautious tone could trigger a flight-to-safety and help the pair gain traction. On the other hand, the probability of a September rate hike could increase on a hawkish tone help the USD gather strength against its rivals and make it difficult for the pair to extend higher.
Technical levels to consider
The immediate resistance for the pair aligns at $1260 (Jul. 4 high) ahead of $1267 (20-DMA) and $1272 (Jun. 24 high). On the downside, supports could be seen at $1250 (daily low), $1245 (Jun. 28 low) and $1239 (Jul. 2 low).
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