After closing the first three days of the week in positive territory and touching its highest level since late March at $1310 on Wednesday, the XAU/USD pair fell sharply on Thursday and the bearish pressure gathered strength below the $1300 handle to drag the pair towards $1290. The broad-based USD strength seems to be driving the pair's price action. Although the FOMC reaffirmed its cautious outlook and willingness to wait before making another policy change, the greenback didn't have a difficult time staying resilient against its major rivals with the US Dollar Index rising above the 97 mark. Meanwhile, the 10-year U.S. Treasury bond yield turned north today to weigh on traditional safe-havens such as the precious yellow metal forcing the pair to move lower.
Gold prices took a plunge during yesterday's session and broke below the $1300 handle. The price is currently trying to hold above the $1291.35 support level as the momentum is dropping drastically with way more room to go before entering the oversold zone. As price crossed the 20-period MA at $1300, more downside is expected before any correction back up. The next level we will be watching is the $1285.35 important key support level.
Support: 1291.35/ 1285.35
Resistance: 1293.78 / 1296.99