Gold loses momentum ahead of $1,480 as focus remains on trade, FOMC

• Wall Street looks to open in negative territory on Wednesday.
• US Dollar Index clings to recovery gains near 98.
• 10-year US Treasury bond yield loses more than 2%.  

The XAU/USD pair extended its steady recovery that started last week and touched a fresh two-week high of $1,479 before losing its traction ahead of the American session. As of writing, the pair was trading at $1,473.50.

US-China trade headlines continue to affect risk sentiment

The lack of clarity on the United States (US)-China trade dispute has been weighing on the market sentiment since the start of the week and allowing safe-haven assets such as the precious metal find demand.

On Tuesday, US President Donald Trump reiterated his willingness to raise tariffs on Chinese imports if they failed to reach a trade deal. Moreover, the US Senate approved the Hong Kong human rights bill to revive concerns over this development hurting the possibility of finalizing a deal.

However,  CNBC’s Beijing Bureau Chief  Eunice Yoon in the last hour reported that China was not looking to link the Hong Kong bill to trade negotiations and helped the market sentiment improved slightly. Nevertheless, the 10-year US Treasury bond yield is still down more than 2% on a daily basis and Wall Street’s main indexes look to open in the negative territory with futures posting modest losses ahead of the opening bell.

In the second half of the day, the Federal Open Market Committee  (FOMC) will release the minutes of its October meeting and investors will look for fresh clues on the near-term policy outlook. Ahead of this event, the US Dollar Index is up 0.18% on the day at 98, making it difficult for the pair to preserve its bullish momentum.

Technical levels to watch for