• Improving risk sentiment dents safe-haven demand and prompts some selling.
• Recovering US bond yields/USD adds to the selling bias/ latest leg of the slide.
Gold failed to capitalize on the early European session uptick to the $1300 neighborhood and has now dropped to the lower end of its daily trading range.
A slight improvement in the global risk sentiment, as depicted by a sudden turnaround in the European equity markets dented the precious metal’s relative safe-haven status and turned out to be one of the key factors behind the intraday slide.
A goodish pickup in the US Treasury bond yields, with the yield on the benchmark 10-year government bond yield recovering over 1% intraday, reinforced the risk-on mood and was also seen driving flows away from the non-yielding yellow metal.
Adding to this, the US Dollar has managed to reverse an early dip and is now looking to build on the intraday positive move, which further undermined demand for the dollar-denominated commodity and collaborated to the latest leg of a slide.
The downside, however, remained cushioned as investors still seemed reluctant to place any aggressive bearish bets/unwinding near-term bullish positions amid the recent escalation in the US-China trade tensions and worries about slowing global economic growth.
Technical levels to watch