Gold limits its losses as Wall Street falls sharply, trades near $1268

• S&P 500 drops to its lowest level in more than 3 weeks at the opening.
• US Dollar Index stays quiet above the 94 mark.
• Gold finds support near $1265.

The troy ounce of precious metal dropped to a daily low at $1265 in the European morning and started retracing its losses as the weak market sentiment ramped up the demand for traditional safe-havens. As of writing, the XAU/USD pair was trading at $1268, still losing a little over $1 on the day.

The sharp dropped witnessed in the major European equity indices forced Wall Street to start the day lower. At the moment, both the Dow Jones Industrial Average and the S&P 500 are both down around 1% as the concerns over the trade conflict between the United States and China push investors away from risky assets. News of China looking to curb its investments in U.S. technology firms seems to be the latest development that increased the possibility of a long-lasting trade war.

Meanwhile, today's data from the Federal Reserve Bank of Chicago showed that the National Economic Activity Index fell short of the market expectations as it dropped to -0.15 in May from 0.42 in April. On the other hand, after contracting by 3.7% in April, new home sales in the U.S. rose by 6.7% in May. Following the mixed data, the US Dollar Index was last seen at 94.08, losing 0.12% on the day.

Technical levels to consider

Supports for the pair align at $1265 (daily low), 1252.50 (Dec. 18 low) and $1243 (Dec. 8 low). On the upside, resistances are located to 1276 (Jun. 20 high) ahead of $1289 (20-DMA) and $1300 (psychological level).