- US-China trade truce weighed heavily on the commodity’s safe-haven status.
- Investors scale back aggressive Fed rate cut bets and adds to the selling bias.
- This week’s important US macro data now eyed for a fresh directional impetus.
Gold added to its bearish weekly gap opening below the key $1400 psychological mark and dropped to over one-week lows in the last hour.
Spot prices dropped as much as 1.8% – marking the biggest intraday fall in a year, to $1384 an ounce in reaction to the latest positive trade-related development. At the highly anticipated G20 summit, the US President Donald Trump and his Chinese counterpart Xi Jinping agreed to resume trade negotiations and weighed heavily on the precious metal’s relative safe-haven status.
This coupled with the fact that investors might have already started scaling back their expectations for a 50bps Fed rate cut move in July – evident from a goodish pickup in the US Treasury bond yields, further collaborated towards driving flows away from the non-yielding yellow metal. Adding to this, some follow-through US Dollar short-covering move at the start of a new trading week exerted some additional downward pressure on the dollar-denominated commodity.
It would now be interesting to see if the commodity is able to attract any buying interest at lower levels or the current slide marks the end of its recent bullish momentum to multi-year tops as the focus now shifts to important US macro data scheduled at the beginning of a new month, starting with the release of ISM manufacturing PMI – due later during the early North-American session on Monday.
The key focus, however, will be on Friday’s closely watched US monthly jobs report – popularly known as NFP, which is likely to help investors determine the commodity’s next leg of a directional move.
Technical levels to watch
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