Gold pares daily losses, $1270 on sight

After refreshing its two-week low against the USD at $1260, the precious metal made a sharp u-turn and moved back into the positive area amid a USD sell-off. At the moment, the XAU/USD pair is trading at $1266.50, up 0.2% on the day.

Despite the sharp drop and the following quick recovery following the tax plan declaration, the XAU/USD remains in a relatively narrow $8 trading range between $1260 and $1268 on Wednesday. The fact that the three major equity indexes in the U.S. have been able to hold on to their daily winnings make it difficult for the safe haven Gold to find demand. In addition, the greenback seems to be able to fend off the selling pressure as the US Dollar Index is recovering back towards 99. As of writing, the index was up 0.25% at 98.95.

• Full summary of Trump's tax plan

The next catalyst for the XAU/USD could come in during the early hours of the European session when the BoJ press conference gets under way. Although this event is not directly related to Gold, potential sharp fluctuations in the USD/JPY pair could determine a direction for the DXY, thus impacting the price action of XAUUSD.

Technical outlook 

The initial support for the pair could be encountered at $1260 (daily low), ahead of $1248 (50-DMA) and $1240 (200-DMA). To the upside, resistances align at $1271 (20-DMA), $1288 (Apr. 21 high) and $1295 (Apr. 17 high).