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  • US-China trade optimism/resurgent USD demand weighed heavily on Wednesday.
  • Retreating US bond yields extended some support; risk on mood capping gains.

Gold edged higher on Thursday and recovered a part of the previous session’s sharp intraday slide to weekly lows, albeit lacked any strong follow-through.
 
Renewed optimism over a possible resolution to the prolonged US-China trade dispute weighed heavily on traditional safe-haven assets and led to Wednesday’s dramatic intraday slide for the precious metal Gold. Hopes of a meaningful progress on the US-China trade negotiations reignited after the US President Donald Trump told reporters in New York that both the sides are having some very good conversations on trade and an agreement could happen sooner than anyone thinks.

Weighed down by renewed trade optimism

Renewed trade optimism triggered a rally in the US equity markets and provided a goodish lift to the US Treasury bond yields, which eventually led to a strong intraday US Dollar upsurge and further collaborated towards driving flows away from the non-yielding yellow metal. In fact, the greenback posted its biggest daily gains in three months on Wednesday and helped offset earlier reports that Congress has begun a formal impeachment inquiry against Trump.
 
Meanwhile, the bearish pressure eased a bit near the key $1500 psychological mark, with a modest USD pullback on Thursday extended some support to the dollar-denominated commodity and helped regain some traction. However, the prevailing risk-on mood, as depicted by a positive opening across European equity markets, continued denting the precious metal’s safe-haven status and kept a lid on any meaningful recovery, at least for the time being.
 
In absence of any major market-moving economic release from the US, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the commodity’s intraday price action and assist traders to grab some short-term opportunities.

Technical levels to watch