- A modest USD bounce prompts some profit-taking from overbought conditions.
- The downside remains limited amid escalating geopolitical tensions/fading US-China trade optimism.
- Tuesday’s US economic data eyed for some impetus ahead of Powell’s scheduled speech.
Gold trimmed a part of its early strong gains to fresh multi-year tops but has managed to hold with goodish intraday daily gains around the $1328 region.
Having jumped to an intraday high level of $1439.08 – the highest since May 2013, the precious metal witnessed some profit-taking from extremely overbought conditions on the daily chart and was being weighed down by a modest US Dollar recovery from multi-month lows.
With investors still digesting a more dovish shift by the FOMC last week, traders seemed inclined to lighten their bearish USD bets ahead of the Fed Chair Jerome Powell’s speech and turned out to be one of the key factors exerting some pressure on the dollar-denominated commodity.
The negative factor, to some extent, seemed to have been negated by the prevalent cautions mood around equity markets, which continued underpinning demand for the precious metal’s relative safe-haven status and might help limit further downside, at least for the time being.
Escalating geopolitical tensions in the Middle East – especially after the US President Donald Trump imposed new sanctions on Iran’s supreme leader and foreign minister, coupled with fading US-China trade optimism weighed on investors’ appetite for perceived riskier assets.
It is worth mentioning that a senior US official said that Trump is comfortable with any outcome from the talks with his Chinese counterpart on the sidelines of the G20 summit later this week and dampened prospects for an immediate resolution to the prolonged trade disputes between the world’s two largest economies.
Meanwhile, Tuesday’s US economic docket – featuring the release of Conference Board’s Consumer Confidence Index, Richmond Manufacturing Index and new home sales data, will be looked upon for some short-term trading impetus during the early North-American session.
Technical levels to watch
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