- The prevalent cautious mood benefitted gold’s perceived safe-haven status.
- Some follow-through USD strength might continue to cap any strong gains.
Gold lacked any firm near-term directional bias and remained confined well within this week’s narrow trading band below the $1480 region.
A combination of diverging forces failed to provide any meaningful impetus to the precious metal and led to a subdued/range-bound price action for the third consecutive session on Wednesday. Traders refrained from placing any aggressive bets, rather preferred to wait on the sidelines and wait for a fresh catalyst before positioning for the next leg of a directional move.
Upside seems limited
As investors looked past the recent optimism from the US-China trade agreement, the re-emergence of Brexit risks weighed on investors’ sentiment through the early European session on Wednesday. This was evident from the prevalent cautious mood across equity markets, which seemed to be the only factor that underpinned demand for traditional safe-haven assets – like gold.
The global flight to safety was further reinforced by a modest pullback in the US Treasury bond yields, which further played its part in lending some support to the non-yielding yellow metal. Bulls, however, lacked any strong conviction amid some follow-through US dollar strength, supported by the overnight hawkish comments by Dallas Fed President Robert Kaplan.
Kaplan reiterated that interest rates will be kept on hold unless there is a drastic change in the US economic outlook and remained supportive of the bid tone surrounding the greenback, which eventually kept a lid on any strong gains for the dollar-denominated commodity.
It will now be interesting to see if the metal is able to gather the required momentum or continues with its range-bound trading action. In absence of any major market-moving economic releases from the US, the USD price dynamics and the broader market risk sentiment might continue to act as key determinants of the commodity’s momentum on Wednesday.
Technical levels to watch
Share
