- Fears of a full-blown US-China trade war continued to benefit the safe-haven commodity.
- A fresh leg of a free-fall in the US bond yields provided an additional boost on Wednesday.
- Renewed USD weakness does little to hinder the ongoing strong bullish momentum.
Gold surged to fresh multi-year tops on Wednesday, with bulls now eyeing a move towards conquering the key $1500 psychological mark.
The precious metal built on this week’s bullish break through the $1448-50 supply zone and continued benefitting from the global flight to safety amid renewed fears of a full-blown US-China trade war. Tensions between the world’s two largest economies intensified after the US President Donald Trump’s decision last week to impose a 10% tariff on $300 billion of Chinese imports from Sept. 1.
The announcement helped the commodity to rebound sharply from the $1400 round figure mark – tested last Thursday in the aftermath of a hawkish rate cut by the Fed. Adding to this, a fresh leg of a free-fall in the US Treasury bond yields on Wednesday provided an additional boost to the non-yielding yellow metal and collaborated to the ongoing positive momentum for the third consecutive session.
In fact, the yield on the benchmark 10-year US government bond dropped to its lowest level since Oct. 2016, which now seemed to weigh on the US Dollar demand and further underpinned demand for the dollar-denominated commodity. Wednesday’s strong gains also marked the fourth day of up-move in the previous five and lifted the commodity to its highest level since April 2013.
It would now be interesting to see if bulls maintain their dominant position or opt to take some profits off the table amid extremely overbought conditions and absent relevant market moving economic releases from the US. Moving ahead, a scheduled speech by Chicago Fed President Charles Evans will now be looked upon for some short-term trading opportunities later this Wednesday.
Technical levels to watch
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