Gold price eases toward $1330 as DXY turns flat

New York (Jan 20)  After reaching a fresh daily high at $1338 during the European session, the XAU/USD pair lost its traction and started to consolidate its daily gains. As of writing, the pair was trading at $1334, still up 0.55% on the day.

Global equity indexes' relatively upbeat performance on Friday didn't allow the safe-haven gold to preserve its strength against the buck. If Wall Street starts the day on a positive note, the corrective slide is likely to extend toward the end of the week. As of writing, Germany's DAX Index was up 1.05% while the UK's FTSE 100 was adding 0.2%.

On the other hand, following another test of the 90 handle earlier in the day amid escalating concerns over the possibility of a government shutdown in the U.S., the US Dollar Index staged a modest recovery in the early NA session, increasing the bearish pressure on the pair. At the time of writing, the DXY was at 90.32, where it was virtually unchanged on the day.

Later in the session, the University of Michigan is going to release the preliminary January Consumer Sentiment Index number, which is expected to improve to 97 from 95.9. However, further developments surrounding the government spending bill could remain as the primary catalyst in the session.

Technical outlook

The CCI indicator on the daily graph remains below the 100 mark, suggesting that the bullish momentum is having a difficult time gathering strength. The initial 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 align at $1344/45 (Sep. 5 high/Jan. 15 high), $1350 (Sep. 7 high) and $1358 (Sep. 8 high).

FXstreet