- An intraday pullback in the US bond yields helped gain some traction.
- US-China trade optimism/a modest USD uptick might cap further gains.
- The market focus remains firmly on the FOMC decision on Wednesday.
Gold finally broke out of its Asian session consolidation phase and edged higher to refresh daily tops, around the $1495 region in the last hour.
The precious metal stalled its recent pullback from over three-week tops – set last Friday – and managed to find some support near the $1490 region, though might still struggle to gain any strong follow-through traction amid indications of a partial US-China trade deal.
Focus on trade, FOMC
The US President Donald Trump indicated on Monday that they are “ahead of schedule” on finalizing phase one of the trade agreement with China. The comments remained supportive of the prevalent risk-on mood and weighed heavily on traditional safe-haven assets – including Gold.
The downside, however, remained cushioned amid expectations that the Fed will cut interest rates again at the end of a two-day meeting on Wednesday. This coupled with an intraday pullback in the US Treasury bond yields extended some support to the non-yielding yellow metal.
Hence, the key focus will be on the FOMC announcement on Wednesday. Given that 25 bps rate cut is nearly priced in the market, investors will be eager to find if this would be the end of the easing cycle or the central bank remains ready to cut more in the near future.
This will eventually play a key role in driving the near-term sentiment surrounding the US Dollar and provide some meaningful impetus to the dollar-denominated commodity – Gold. In the meantime, Tuesday’s US economic docket will be looked upon for some short-term trading opportunities.
Technical levels to watch
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