XAU/USD trades in a tight $5 range on Monday. DXY finds support near 90.20 handle.
After finishing the previous week with a loss of more than $10, the XAU/USD pair started the week with a small bullish gap but failed to extend its gains. As of writing, the pair was trading near $1331, virtually unchanged on the day. Despite today's fluctuations, the pair is moving in a relatively tight trading range.
The US Dollar Index, which made a technical correction on late Friday, came under pressure during the early trading hours of the Asian session on Monday amid news of the U.S. government shutdown. During the European session, the DXY fell to a fresh daily low at 90.20 but started to retrace its losses in the last couple of hours, making it difficult for the XAU/USD to preserve its bullish momentum. As of writing, the index was still down 0.2% on the day at 90.32.
With a relatively quiet economic docket, investors are likely to remain focused on the political developments from the U.S. "In the US, investors will focus on the implications of a shutdown of the US government on Friday, as the US Senate failed to pass a short-term funding measure,” Danske Bank analysts wrote in a recent report.
Technical outlook
The CCI indicator on the daily chart edged lower toward the 0 mark on Monday, suggesting a short-term neutral outlook for the pair. The first technical support for the pair could be seen at $1324/22 (Jan. 19 low/Jan. 12 low) ahead of $1308 (Jan. 10 low) and $1300 (psychological level). On the upside, resistances are located at $1344/45 (Sep. 5 high/Jan. 15 high), $1350 (Sep. 7 high) and $1358 (Sep. 8 high).
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