Gold: Stronger USD pushes the bullion to $1308, the first daily negative in three

Gold prices traded around $1308 near to the end of Monday that’s on the road to register the first negative daily closing in the previous three. The main culprit for the bullion’s drop was the stronger US Dollar whereas outflows at ETFs and doubts over future demand also added weakness into the yellow metal.

The US Dollar registered across the board strength during the first day of the week as investors rushed to the greenback in search of risk safety while sluggish data from rest of the major economies and doubts surrounding Sino-US trade deal loom.

The US Dollar Index surged to the mid-December highs and the USD marked fresh 2019 highs against the Euro, the GBP and the JPY as US delegates reach China for another round of high-level trade talks to be held on February 14 and 15. The Chinese authorities conveyed displeasure over the US action against the South China Sea while the US President and White House advisor signaled less likelihood of the successful trade deal with China during last week.

At the economic front, British GDP growth for the fourth quarter of 2018 didn’t bode well and slipped past 0.3% forecast to 0.2%. The same added worries concerning the health of the global economy when US-China trade protectionism have already had a bitter impact to witness. The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, registered consecutive five days of outflows during the last week.

While challenges to global growth dim physical demand of the yellow metal, rising USD added downside pressure on the commodity that’s traded in the greenback. As a result, the gold prices are struggling to justify their safe-haven appeal in recent days despite global economic pessimism.

XAU/USD Technical Analysis

The price bounced off the near-term support-line connecting lows from late-January and may aim for the recovery toward $1311. However, a downward sloping trend-line at $1315.50 can challenge the bullion’s further advances, if not then $1317.30 $1321 and $1326 may regain market attention.

On the downside, break of $1304.50 support-line can highlight the $1300 round-figure for sellers, a break of which could further weaken the quote towards $1296.00 support.