- Brexit uncertainty causes market mood to turn sour on Wednesday.
- US Dollar Index stays directionless above the 97.50 mark.
- 10-year US Treasury bond yield falls for the second straight day.
The XAU/USD pair gained traction on Wednesday and rose toward the upper-limit of its two-week-old range near the critical $1,500 handle supported by risk-off flows. As of writing, the pair was up 0.45% on the day at $1,494.
Eyes on Brexit headlines
Resurfacing fears of the United Kingdom (UK) crashing out of the European Union (EU) without a deal after British Prime Minister Boris Johnson’s timetable to finalize his proposed deal got rejected by lawmakers allows traditional safe-havens to find demand on Wednesday.
Reflecting the risk-averse market environment, the 10-year United States (US) Treasury bond yield, which lost 2% yesterday, continued to push lower and was last down 1.05% on the day at 1.750%.
Nevertheless, investors seem to be taking a cautious stance while waiting for the EU to make a decision on a possible Brexit extension to January rather than fleeing to safety as seen by modest gains posted in global equity indexes.
On the other hand, after taking advantage of the selling pressure surrounding the GBP on Tuesday, the Greenback stays relatively quiet with the US Dollar Index consolidating its recent gains above the 97.50 handle ahead of Thursday’s durable good orders, new homes sales, and Markit Manufacturing and Services PMI data releases.
Technical levels to watch for