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  • Dismal US data helped Gold to stage a solid bounce on Tuesday.
  • Recovering US bond yields/USD kept a lid on any follow-through.
  • Traders now eye US ADP report for some short-term opportunities.

Gold quickly reversed an early dip to the $1475-74 region and refreshed session tops in the last hour, albeit remained below the overnight swing high.
 
The precious metal on Tuesday staged a goodish rebound and rallied nearly 2% from two-month lows following the disappointing release of US ISM manufacturing PMI. The reading marked the worst level since June 2009 and bolstered fears of a US recession, which eventually benefitted traditional safe-haven assets – including Gold.

The overnight bounce lacks follow-through

This coupled with the fact that investors might have started pricing in prospects for yet another interest rate cut by the Fed in October and further underpinned demand for the non-yielding yellow metal. Adding to this, a sharp intraday pullback in the US Dollar provided an additional boost to dollar-denominated commodities – like Gold.
 
The risk-off mood prevailed through the early European session on Wednesday, albeit some renewed uptick in the US bond yields extended some support to the USD and turned out to be one of the key factors that kept a lid on any strong follow-through up-move for the commodity.
 
Investors also seemed reluctant to place any aggressive bets, rather preferred to stay on the sidelines ahead of Friday’s release of the official US monthly jobs report – popularly known as NFP. In the meantime, the ADP report might produce some short-term trading opportunities later during the early North-American session on Wednesday.

Technical levels to watch