Gold slumps to 2-week lows near $1270 as Wall Street surges
- Gold loses more than $10 on improved market sentiment.
- 10-year US T-bond yields up more than 2% on the day.
- Major equity indexes in the U.S. rally to all-time highs.
Following a modest recovery attempt above the $1280 handle in the early NA session, the XAU/USD pair reversed course and lost more than $10 to renew its lowest level since mid-November at $1270.43. As of writing, the pair was trading at $1274, losing 0.75% on the day.
Strong risk appetite underpins the demand for safe-havens
The precious metal is suffering heavy losses in the second half of the day amid an improved market sentiment. After starting the day on a positive note, major equity indexes in the U.S. built on their early gains and advanced to new record highs on increasing hopes of the tax bill passing through the Senate. At the moment, the Dow Jones Industrial Average is up 1.5% while the Nasdaq Composite and the S&P 500 indexes are both adding 1%. Moreover, the 10-year US Treasury-bond yield is up broke above 2.4% mark to touch its highest level in a month at 2.435%, rising 2.4% on the day.
Meanwhile, the US Dollar Index, which fell sharply to 92.68 despite a lack of clear catalyst, recently recovered above the 93 handle, further increasing the pressure on the pair.
In case Asian equity indexes receive a boost from Wall Street's performance and push higher on Friday, the pair is likely to continue to edge lower on the last day of the week.
If the pair ends the day below $1272, it's going to record its first daily close behind the critical 200-DMA in more than four months, which could ramp up the technical selling pressure. Moreover, the CCI indicator on the daily graph recently eased below the -100 mark, suggesting that the bearish momentum is building up. Below $1272, the pair could aim for $1263 (Oct. 27 low) and $1251 (Aug. 8 low). On the upside, resistances align at $1281 (50-DMA), $1293 (Nov. 24 high) and $1300 (psychological level).