Gold sticks to small gains above $1280, Senate's tax plan awaited
- Gold eases off multi-week highs on DXY recovery.
- US T-bond yields support the greenback in the NA session.
- Wall Street stays nervous ahead of the Senate tax plan.
The XAU/USD pair, which advanced to its highest level since October 20 at $1288, lost its traction in the NA session and erased a portion of its daily gains. As of writing, the pair was trading at $1283, up only 0.1% on the day.
The pair's upsurge during the first half of the day was fueled by the broad-based greenback weakness. However, after dropping to the 94.40 handle, the US Dollar Index staged a modest recovery supported the solid performance of the US T-bond yields. At the moment, the 10-year T-bond yield is up 1.1% while the DXY is still down 0.2% at 94.60.
On the other hand, the uncertainty surrounding the differences between the Senate and the House GOP tax bills forces investors to stay away from stocks on Thursday, reflecting a mixed market sentiment that benefits the traditional safe-haven precious metal. Following a negative start to the day, the Dow Jones Industrial Average and the S&P 500 indexes stretched their losses and are down 0.4% and 0.3% respectively. Reuters recently reported that the US House Ways & Means Chairman Rep. Kevin Brady said that his panel would finish their work on the tax bill on Thursday and further added that the House tax bill would adhere to $1.5 trillion limit on the added debt created by the legislation.
Technical levels to consider
The pair's rise witnessed on Wednesday and today lifted the CCI indicator on the daily graph well above the 100 mark, showing that the bullish momentum continues to strengthen. The first technical resistance for the pair aligns at $1291 (Oct. 19 high) ahead of $1300 (psychological level) and $1306 (Oct. 16 high). On the downside, supports could be encountered at $1275 (Nov. 8 low), $1268 (200-DMA) and $1260 (Oct. 6 low).