Gold rises above $1200 as US political drama intensifies

• Greenback comes under pressure on political developments in the U.S.
• The DXY eases below the critical 95 mark.

The XAU/USD pair gained traction ahead of the NA session and rose above the critical $1200 mark as the USD came under a renewed selling pressure on the latest headlines surrounding the political crisis in the United States. At the moment, the pair is up nearly $5 on the day at $1201.

On Wednesday, US President Donald Trump's former lawyer, Michael Cohen, has pleaded guilty in a New York court to violating campaign finance laws by the direction of "the candidate" and added that the main goal was to influence the 2016 presidential election. Speaking to news outlets, Lanny Davis, Michael Cohen's lawyer, said his client regrets the thing he had done for Donald Trump and stated that Cohan had information regarding a Russian conspiracy.

Reacting to the escalating political tension, the US Dollar Index fell to its lowest level in nearly three weeks below the critical 95 mark and was last seen down 0.27% on the day at 94.95.

Later in the day, existing home sales will be released from the United States. However, before the FOMC publishes the August meeting minutes at 18 GMT, the market reaction is to this data likely to stay limited. 

“We expect the minutes to provide additional information on participants’ concerns regarding US trade policy and the possible downside risk from increased tariffs and softening business sentiment,” Nomura analysts said in a recently published report.

Technical levels to consider

On the upside, the pair could face the initial resistance at $1203 (20-DMA) followed by $1212 (Aug. 13 high) and $1225 (50-DMA). With a daily close below $1200 (psychological level), the pair could extend its losses toward $1192 (daily low) and $1187 (Aug. 21 low).