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Gold Price Analysis: XAU/USD tests $1,600 ahead of US data

  • US Dollar Index continues to erase last week's losses.
  • Major European equity indexes post modest gains on Tuesday.
  • Focus shifts to CB Consumer Confidence Index data from US.

The XAU/USD pair closed the first day of the week virtually unchanged near $1,620 and turned south on Tuesday pressured by the relatively upbeat market mood and the broad USD strength. As of writing, the pair was trading near $1,600, erasing $21.5, or 1.33%, on the day.

The sharp rebound witnessed in the Chinese PMI data for both the manufacturing and the service sectors in March revived hopes of a "V-shaped recovery" in the global economy. The improved market sentiment seems to be making it tough for gold to find demand as a safe-haven. As of writing, Germany's DAX 30 was up around 0.4% on the day while the Euro Stoxx 50 and the UK's FTSE 100 were adding 0.2% and 0.7%, respectively.

USD stays strong ahead of key data

Meanwhile, ahead of the Conference Board's Consumer Confidence Index from the US, the US Dollar Index is climbing higher toward the critical 100 handle to reflect the broad-based USD strength.

Previewing the data, "consumers, especially the vast majority who remain employed, can be expected to pull back sharply on spending in the next few weeks,"  said Joseph Trevisani, senior analyst at FXStreet. "If nothing else, their isolation will obviate a whole range of normal incidental and discretionary expenditures."

Technical levels to watch for

 

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