Gold sticks to daily gains near $1320 as Wall Street remains on the back foot

• Gold surges to fresh multi-month highs on Wednesday.
• DXY consolidates daily losses, stays below 92.
• US stocks suffer losses amid negative market sentiment.

After recording losses on the first two days of the week, the XAU/USD pair gathered momentum on Wednesday and reached its highest level since mid-September at $1327 before giving back a part of its daily gains. As of writing, the pair was trading at $1319, up nearly $6, or 0.45%, on the day.

Today's upsurge has been fueled by a weakening risk appetite, which ramped up the demand for traditional safe havens such as the JPY and the precious metal. Following the drop witnessed in European and Asian equity indexes, Wall Street started the day on a weak on Wednesday. With the CBOE Volatility Index, Wall Street's fear gauge, advancing to its highest level in more than a week, the Dow Jones Industrial Average and the S&P 500 indexes are losing 0.15% and 0.18% respectively.

On the other hand, the US Dollar Index, which dropped sharply on market chatter of China planning to stop purchasing US Treasury bonds, was able to find support near 91.70 in the early NA session. The DXY is now at 91.92, losing 0.35% on the day.

Although the pair retreated from its recent highs, the negative market sentiment is likely to keep the pair in the positive territory. Later in the session, St. Louis Fed President James Bullard is going to be delivering a speech. A hawkish tone from Bullard could help the DXY extend its recovery above the 92 mark.

Technical outlook

Following today's rise, the CCI indicator on the daily chart started moving towards the 100 mark, suggesting that the bullish momentum is building up. The first technical resistance for the could be seen at $1327 (daily high) ahead of $1334 (Sep. 14 high) and $1344 (Sep. 5 high). On the downside, supports could be seen at $1300 (psychological level), $1294 (Dec. 29 low) and $1286 (Dec. 28 low).