Gold breaks above $1330, moves into positive territory
The XAU/USD pair gained traction in the first half of the NA session and renewed its daily high at $1338 before retracing some of its recent gains. As of writing, the pair was trading at $1336, up $2.5, or 0.2%, on the day.
After starting the week with a bullish gap, the pair dropped to $1326 during the day but failed to erase that gap as today's fall was seen as a technical correction. In fact, the geopolitical tension between North Korea and the U.S. continues to stay high, making it easier for the safe-haven precious metal to find demand. In a tweet on Tuesday, US President Donald Trump announced that he was going to allow Japan and South Korea to buy a substantially increased amount of highly sophisticated military equipment from the United States.
On the other hand, the greenback is facing a selling pressure amid dovish comments from the FOMC member Brainard and weak factory orders data, which recorded a contraction of 3.3% on a monthly basis in July. Brainard in his speech said that the long period of low inflation was forcing the Fed to be cautious over another rate hike and suggested that the bank was ready to start shrinking the balance sheet. At the moment, the US Dollar Index was at 92.32, down 0.27% on the day.
- US Dollar drops to lows near 92.40
Minneapolis Fed President Neel Kashkari will be coming up next in the session ahead of Dallas Fed President Robert Kaplan. Investors will continue to seek hints regarding the timing of the next rate hike and the start of the balance sheet reduction.
Technical outlook
The first technical hurdle for the pair aligns at $1340 (Monday's high) before $1352 (Sept. 6, 2016, high) and $1365 (Aug. 4, 2016, high). On the downside, supports could be seen at $1316 (Sept. 1 low), $1300 (psychological level) and $1291 (Aug. 27 low). The CCI indicator on the daily graph is moving sideways near the 100 handle, suıggesting that the bullish momentum is struggling to build up. The RSI indicator on the same graph continues to show overbought conditions above the 70 mark.