Gold extends rally, renews 8-months highs near $1311
- Precious metal finds demand as investors stay away from major currencies.
- US Dollar Index struggles to make a meaningful recovery, stays below 96.
- European indices rebound following yesterday's sell-off.
The troy ounce of the precious metal rose to its highest level in USD terms since mid-May near $1311 and was last seen trading at $1309, adding 0.4% on a daily basis.
With major currencies struggling to attract investors' attention ahead of this week's key events, gold continues to gather strength. Later today, markets will be paying close attention to the political headlines from the UK as the Parliamentary vote on amendments to British Prime Minister Theresa May's 'Brexit Plan B' is likely to cause changes in the markets' risk perception. Furthermore, the greenback is staying relatively quiet ahead of Wednesday's FOMC meeting as participants are refraining from making larget bets amid the possibility of a dovish shift in the Fed's language.
Meanwhile, although major European equity indexes continue to recover Monday's losses to point to improved market sentiment, gold preserves its bullish momentum and refuses to change its direction. Wall Street's performance on Tuesday could impact the pair's price action in the second half of the day in the absence of macroeconomic data releases from the U.S.
Technical levels to consider
The initial resistance for the pair aligns at $1311 (daily high) ahead of $1315 (May 15, 2018, high) and $1322 (May 14, 2018, high). On the downside, supports are located at $1300 (psychological level), $1290 (20-DMA) and $1280 (Jan. 25 low).