Gold eases off weekly highs, remains positive on day around $1280

After rising to its highest level since September 29 at $1285, the XAU/USD pair went into a consolidation phase and was last seen trading at $1280, still up $3.5, or 0.3%, on the day.

The precious metal started the week on a high note as the resurfacing geopolitical tension between the United States and North Korea kept the risk appetite low, increasing the demand for the traditional safe-haven gold. US President Donald Trump on Monday tweeted out "our country has been unsuccessfully dealing with North Korea for 25 years, giving billions of dollars & getting nothing. Policy didn't work!"

On the other hand, the US Dollar Index, which started the week with a small bearish gap struggled to extend last week's gains and eased lower toward the mid-93 region during the day, helping the pair sustain its bullish momentum. However,  with the DXY turning flat near 93.60 in the last hour, the pair started to retrace its daily gains. 

The fact that the US markets will be closed due to Columbus Day holiday on Monday is likely to keep the pair in its recent range in the remainder of the day. Until the FOMC releases the minutes of its September meeting on Wednesday, the pair's price action could continue to be impacted by the risk sentiment.

Technical outlook

On the downside, $1262 (200-DMA) remains as a critical support ahead of $1251 (Aug. 8 low) and $1243 (Jul. 26 low). On the upside, technical hurdles align at $1288 (20-DMA) and $1300 (psychological level/50-DMA) and $1312 (Sep. 25 high). The CCI indicator on the daily graph is now moving around the 0 handle, failing to provide any clues regarding the next short-term direction.