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Gold edges lower toward $1280 as DXY extends rebound

  • US Dollar Index recovers to 96 area on Tuesday.
  • US Pres. Trump repeats that talks with China are going well.
  • US stock futures point to a positive start.

The XAU/USD pair came under a renewed selling pressure in the early NA session as the dollar continued to gather strength. As of writing, the pair was down $8.5, or 0.65%, on the day at $1280.60.

After posting daily losses for the third straight day on Monday, the US Dollar Index gained traction on Tuesday as the dismal data from Europe and concerns over Brexit pulled investors away from European currencies and helped the dollar find demand. At the moment, the DXY is up 0.35% on the day at 96.

In the meantime, a sharp upsurge witnessed in major European equity indexes points to an improved market sentiment today, which makes it difficult for the precious metal to find interest as a safer alternative. While Germany's DAX is up nearly 1.5% on the day, the UK's FTSE is adding a little over 1% and the S&P 500 Futures is gaining 0.95% to suggest that Wall Street's rally that started last Friday is likely to continue for the third straight day.

Technical levels to consider

With a decisive break below $1280 (daily low), the pair could aim for $1272 (20-DMA) and $1264 (Oct. 26 low). On the upside, resistances are located at $1290 (daily high), $1295 (Jan. 7 high) and $1300 (psychological level). Meanwhile, the CCI indicator on the daily chart is approaching the 0 mark, suggesting that the bullish pressure continue to lose strength. 

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