Gold climbs further beyond $1500 mark, lacks follow-through

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  • Weaker US bond yields weighed on the USD and helped regain some traction.
  • Cautious mood benefited traditional safe-haven assets and remained supportive.
  • US-China trade optimism seemed to be the only factor capping any strong gains.

Gold edged higher for the second consecutive session on Friday, albeit remained well within a familiar trading range held over the past two weeks or so.
 
The precious metal extended its recovery move from the post-FOMC swing losses to over one-month lows and continued gaining some follow-through traction on Friday amid a combination of supporting factors.

Weaker US bond yields/USD extend some support

Given the uncertainty over the next move by the Fed, some renewed weakness in the US Treasury bond yields kept the US Dollar bulls on the defensive and extended some support to the non-yielding yellow metal.
 
This coupled with the prevalent cautious mood, which tends to benefit traditional safe-haven assets, provided an additional boost to Gold and remained supportive of the move back above the key $1500 psychological mark.
 
Despite the uptick, bulls lacked any strong conviction amid the recent optimism over the resumption of the US-China trade talks. Hence, the incoming trade-related headlines might continue to influence the price action.
 
Investors now look forward to the lower-level trade talks between the US and China in Washington, which will lay the groundwork for high-level discussions in early-October and eventually provide some meaningful impetus.
 
This coupled with a scheduled speech by Boston Fed President Eric Rosengren – later during the US session – might further assist investors to grab some short-term trading opportunities on the last day of the week.
 
From a technical perspective, it will be prudent to wait for a sustained breakthrough the recent trading range before placing any aggressive directional bets amid absent relevant market moving economic releases from the US.

Technical levels to watch

 

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