Gold sell-off pauses near $1240

The XAU/USD pair came in under a sudden and a sharp selling pressure in the European session and dropped to its lowest level in 40 days at $1238.28. following that move, the precious metal started to consolidate its gains against the greenback, allowing the XAU/USD pair to now trade at $1240.50, where it's still losing 1.3% on the day.

The steep fall, which accounted for a loss of $15 in the pair, is speculated to be caused by a $2 billion worth liquidation.

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In a few minutes, Durable Goods Orders and Chicago Fed National Activity Index data will be released from the U.S. Ahead of the data, the US Dollar Index is moving in its tight range above the 97 handle. At the moment, the DXY is at 97.05, up 0.06% on the day. The markets expect a rebound in Durable Goods Orders in May and a positive reading could help the index move towards its session high of 97.15, helping the XAU/USD recover more of its losses.

Technical outlook

The lower are of the Bollinger Band on the daily graph could be seen as the first technical support at $1234 ahead of $1228 (200-DMA) and $1218 (May 10 low). To the upside, resistances align at $1255 (50-DMA), $1262 (20-DMA) and $1270 (Jun. 12 high).