- Disappointing housing data from the U.S. limit DXY’s gains.
- Wall Street’s performance at the opening could provide the next directional clue.
- Investors wait for FOMC’s September meeting minutes.
Following yesterday’s downward correction, the XAU/USD pair is trying to gather momentum on Wednesday and trades near $1227 ahead of Wall Street’s opening bell and adding a little over $2 on a daily basis.
Despite today’s modest rise, the pair stays directionless in the near-term as the broad-based greenback strength continues to cap the pair’s gains. The US Dollar Index, which rose to a fresh weekly high near 95.50 earlier in the session, retreated slightly after the U.S. Census Bureau announced that housing starts and building permits fell by 5.3% and 0.6%, respectively, on a monthly basis in September. At the moment, the DXY is up 0.35 on the day at 95.40.
On the other hand, with tech shares gathering momentum in pre-market trading boosted by the upbeat earnings figures Netflix announced yesterday evening, Wall Street could extend its rally into the second day and make it even more difficult for the safe-haven gold to find demand as a safe-haven.
Later in the day, the FOMC is scheduled to publish the minutes of its September meeting, at which it decided to hike the policy rate by 25 bps. Although markets expect the FOMC to reiterate the intention to stay on the tightening path, investors will be looking for clues regarding any concerns over the economy losing momentum next year amid rising Treasury yields.
Technical levels to consider
The initial resistance for the pair aligns at $1235 (Jul. 26 high) ahead of $1244 (Jul. 17 high) and $1255 (Jul. 11 high). On the downside, supports could be seen at $1224 (Oct. 16 low), $1220/19 (Oct. 15 low/daily low) and $1215 (Oct. 12 low).
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