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  • Gold struggles to capitalize on risk-off flows on Friday.
  • US Dollar Index stays flat on the day below 98.50.
  • Focus shifts to macroeconomic data releases from US.

Despite the persistent risk aversion, the precious metal is having a difficult time finding demand on Friday. The XAU/USD pair, which advanced to a fresh multi-year high of $1,689 on Monday, lost its traction and fell to its lowest level since last Friday at $1,619.80. As of writing, the pair was down more than $20, or 1.3%, on the day at $1,621.30.

Profit-taking in gold?

Commenting on gold’s recent movement, “as sentiment has deteriorated, investors have closed some of their open positions in currencies, but most likely also in gold,” said Georgette Boele of ABN AMRO. “Therefore, gold prices have failed to make new highs now that equity markets have aggressively sold off. If risk aversion were to result in a market panic, investors will find cash and very liquid assets attractive. They will probably liquidate gold investment positions.”

On the other hand, the greenback is staying relatively resilient against its major rivals on Friday to keep the bearish pressure intact. The US Dollar Index is flat on the day near 98.40 ahead of the US data dump, which will include PCE Price Index, Trade Balance, and UoM Consumer Confidence Index.

Meanwhile, markets will be keeping a close eye on Wall Street’s performance ahead of the weekend. At the moment, the S&P 500 futures are down 0.5% on the day to suggest that US stocks are likely to open the day in the negative territory.

Technical levels to watch for