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  • Wall Street records modest gains in the early trade.
  • US Dollar Index advances to 94.70 on euro weakness.
  • US 10-year T-bond yields up 1% on the day.

After taking advantage of the USD weakness and closing the day above the $1230 mark on Wednesday, the XAU/USD pair failed to build on its bullish momentum and retraced yesterday’s gains. As of writing, the pair was down 0.35%, or $4.2, on the day near $1227.

Following its sharp fall witnessed in the late NA session yesterday, the US Dollar Index gained traction after the ECB Governor Draghi’s remarks weighed on the euro as investors shifted their focus the diverging monetary policy outlooks between the ECB and the Fed. After meeting an interim resistance near 94.70, the index retreated modestly and was last seen at 94.62, where it was up 0.4% on the day.

In the meantime, major equity indexes in the United States started the day on a mixed note despite the optimism surrounding the Trump administration’s trade policy and allowed the precious metal show some resilience against the greenback. At the moment, the Dow Jones Industrial Average was up 0.55% on the day while the S&P 500 was virtually unchanged.

On the other hand, the 10-year T-bond yield, which generally shows an inverse correlation with safe-havens, was last seen up 1% on the day, suggesting that the pair may have a difficult time recovering its losses.

Technical outlook

The CCI indicator on the daily chart stays near the 0 mark, confirming a near-term neutral outlook. On the downside, supports could be seen at  $1222 (Jul. 23 low), $1211 (Jul. 19 low) and  $1200 (psychological level). Resistances align at  $1235 (Jul. 23/Jul. 26 high) ahead of $1242 (20-DMA) and $1249 (Jul. 12 high).