Gold slumps to $1320 area on upbeat US GDP figures
- Real GDP in Q4 (YoY) expands by 2.6% in the U.S.
- US Dollar Index recovers above 96.
- Wall Street looks to open the day in the red.
The XAU/USD pair came under modest bearish pressure in the last hour and erased its daily gains to turn flat near $1320 after the greenback gathered strength on the back of upbeat GDP figures. As of writing, the pair was trading at $1320.20, up only 40 cents on the day.
In its preliminary estimate today, the U.S. Bureau of Economic Analysis reported that the real GDP in the U.S. is seen expanding 2.6% in the fourth quarter compared to analysts' estimate of 2.3%. Further details of the publication showed that the core personal consumption expenditures (PCE) in the same period increased by 1.7% on a quarterly basis to beat the market expectation of 1.6%. With the initial market reaction to the data, the US Dollar Index recovered from the 23-da low that it set 95.82 earlier in the day and was last seen flat on the day at 96.12.
Later in the day, Chicago PMI and Kansas Fed Manufacturing Index will be looked upon for fresh impetus. Meanwhile, The S&P 500 Futures is down 0.2% on the day, suggesting that Wall Street could open in the negative territory and help the precious metal limit its losses. On the other hand, the 10-year T-bond yield, which has been impacting the greenback's market valuation since the start of the week, was last virtually unchanged on the day at 2.695%.
Technical levels to watch for
The initial support aligns at $1316 (Feb. 27 low) ahead of $1305 (50-DMA) and $1300 (psychological level). On the upside, resistances are located at $1327 (daily high), $1332 (Feb. 25 high) and $1341 (Feb. 21 high).