After touching its daily high at $1253, the XAU/USD pair started to erase its gains and fell below the $1250 handle in the NA session despite the greenback weakness. The pair is now trading at $1246.60, still up 0.15% on the day.
The greenback is being sold off aggressively on Tuesday, pushing the US Dollar Index to its lowest level since the election day in November at 96.22. As of writing, the index is trading at 96.35, down 0.77% on the day. On the other hand, major equity indexes in the U.S. struggle to gain traction with the Dow Jones Industrial Average staying flat on the day and the S&P 500 losing 0.15%, suggesting that investors are staying away from riskier assets.
Both of these market developments in normal conditions should help the precious metal gather strength against the greenback. However, ECB President Draghi's comments on Tuesday stole the spotlight, increasing the demand for the shared currency. Pressured by a stronger euro, the XAU/EUR pair lost more than 1%, which could be seen as the primary reason behind the XAU/USD pair's difficulty to rebound in the session.
- ECB's Draghi: ECB could look through transitory inflation weakness - Bloomberg
Technical outlook
The CCI indicator on the daily graph is moving towards the -100 mark, suggesting that the bearish momentum is likely to sustain in the short-term. The lower arm of the Bollinger Band on the daily graph could be seen as the initial support at $1233 ahead of $1228 (200-DMA) and $1218 (May 10 low). On the upside, resistances align at $1255 (50-DMA), $1262 (20-DMA) and $1270 (Jun. 12 high).
