Gold loses momentum ahead of $1300, still up $6 on the day
- XAU/USD refreshes 6-week high at $1299 on Monday.
- US Dollar Index consolidates below the 93 mark.
- Momentum indicators point to increasing bullish strength.
The XAU/USD pair started the new week on a positive note and surged to its highest level since mid-October at $1299 in the early NA session but lost its momentum before testing the critical $1300 handle. As of writing, the pair was trading at $1294, still up 0.45%, or nearly $6, on the day.
Although no significant catalysts were apparent behind today's upsurge, a broad-based USD weakness fueled the pair's upside. The US Dollar Index, which broke below the 93 mark last week following a surprisingly dovish statement from the FOMC, struggled to find a reason to stage a recovery during the first half of the day on Monday and continued to push lower. However, after touching its worst level in two months at 92.43, the index reversed course on the back of solid macroeconomic data from the U.S. and rose towards the 93 mark. At the moment, the index is at 92.82, up 0.12% on the day.
Highlighting this week's important events, "the U.S. Senate tax bill is headed for a marathon debate this week with the aim to hold a floor vote as early as Thursday. U.S. economic data expected this week include gross domestic product, consumer prices and personal spending and income," Bloomberg's Susanne Barton wrote in a recent article.
With today's rise, the CCI indicator on the daily chart advanced above the 100 mark while the RSI indicator on the same chart started to edge higher towards the 70 mark, both pointing to a buildup in bullish momentum. However, unless the pair makes a daily close above the critical $1300 (psychological level) mark, it could struggle to extend its gains. Beyond that level, $1306 (Oct. 16 high) and $1313.50 (Sep. 26 high) could be seen as next targets. On the downside, supports are located at $1283 (50-DMA), $1278 (Nov. 22 low) and $1272 (200-DMA).