XAU/USD drops to 6-day low at $1324 on Thursday. Greenback weakness allows the pair to recover. Weak market sentiment provides a boost to Gold.
The XAU/USD pair is trading in a relatively tight range on Thursday. After dropping to its lowest level since January at $1324 in the early Asian session on rising risk appetite amid upbeat data from China, the pair retraced its daily losses to turn positive in the second half of the day. As of writing, the pair was trading at $1331, up nearly $5, or 0.35%, on the day.
The US Dollar Index, which advanced up to 90.77 earlier today, failed to extend its gains and stayed in the negative territory following the mixed macroeconomic data releases from the U.S. Although the weekly jobless claims dropped to its lowest level in more than 40 years at 220K, the dismal housing starts data and the disappointing Philly Fed Manufacturing Index kept the DXY under pressure. At the moment, the index is at 90.30, down 0.38% on the day.
On the other hand, following yesterday's record-setting rally, major equity indexes in the U.S. started the day on a weak note with the Dow Jones Industrial Average and the S&P 500 losing 0.15% and 0.3% respectively, assisting the traditional safe-haven gold preserving its strength.
Technical outlook
Following yesterday's drop, the RSI indicator on the daily graph eased below the 70 mark, showing that the pair had corrected its overbought condition. The pair could encounter the initial support at $1324/22 (daily low/Jan. 12 low) followed by $1308 (Jan. 10 low) and $1300 (psychological level). On the upside, resistances align at $1344/45 (Sep. 5 high/Jan. 15 high), $1350 (Sep. 7 high) and $1358 (Sep. 8 high).
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