Gold trades flat near $1510 following Christmas rally
- Troy ounce of gold gains more than $30 this week.
- US Dollar Index retraces last week's rally, drops below 97.20.
- Wall Street looks to open higher on Friday.
The XAU/USD pair rose sharply ahead of the Christmas holiday and extended its rally two days later when investors returned on Thursday. After touching its highest level since early November at $1514 on Friday, however, the pair lost its momentum and was last seen trading flat on the day near $1510.
The thin liquidity conditions during the holiday-shortened week seem to be causing sharp fluctuations in the pair. Additionally, the broad-based selling pressure surrounding the greenback helps the pair edge higher. The US Dollar Index, which rose to its highest level in more than two weeks above 97.80 earlier in the week, was last down 0.43% on the day at 97.15.
Upbeat mood keeps gold's gains in check
On the other hand, the positive risk sentiment makes it difficult for safe-haven gold to preserve its strength. Major European equity indexes are posting daily gains of between 0.3% and 0.5% on Friday and the S&P 500 futures are adding 0.27% to suggest that Wall Street will open in the positive territory.
Although the pair is struggling to stretch higher in the second half of the day, it remains on track to register a weekly gain of more than $30.
Technical levels to watch for