Gold slips to fresh 3-week lows below $1260

After successively holding above the $1260 handle for most of the day, the XAU/USD pair came under a renewed selling pressure in the U.S. afternoon and dropped to its lowest level since April 11 at $1254.80. As of writing, the pair was trading at $1255.20, losing 1% or $13 on the day.

This late slide could be attributed to a renewed broad-based USD strength, which pushed the US Dollar Index up to 99 area once again. At the moment, the index is up 0.03%, at 98.93. However, there were no clear fundamental catalysts that may have caused this USD upsurge. In fact, today's macro data from the U.S. came in below expectations and actually dragged the index to a session low at 98.75.

• US: Slowest improvement in manufacturing business conditions since September 2016 - Markit
• US: April PMI registered 54.8, a decrease of 2.4 from March - ISM

Furthermore, following a weak start to the previous week, the XAU/USD has been confined in a horizontal range for the rest of the week with $1260 level forming a strong base. The fact that this level was broken recently may have triggered stops, allowing the bearish momentum to gather strength.

Technical levels to consider

With a decisive break below $1249 (50-DMA), the XAU/USD pair could target $1239 (200-DMA) and $1232 (Mar. 5 low). To the upside, the former support at $1260 is now the initial hurdle ahead of $1271 (Apr. 26 high) and $1288 (Apr. 21 high)