- Tempered Fed rate cut bets/USD strength continued exerting some downward pressure.
- Improving global risk sentiment further weighed on the commodity’s safe-haven status.
- Traders now await decisions from major central banks before placing any directional bets.
Gold held on to its weaker tone through the mid-European session, albeit has managed to pare some of its early losses to $1414 area, or multi-day lows.
The precious metal extended last week’s late pullback from multi-year tops, with a combination of negative forces fueling the ongoing retracement slide for the third consecutive session on Tuesday.
As investors continued scaling back expectations of an aggressive policy easing by the Fed, the US Dollar stood tall near one-week tops and undermined demand for the dollar-denominated commodity.
This coupled with improving global risk sentiment, as depicted by a positive mood around equity markets further dented the precious metal’s relative safe-haven status and collaborated to the downtick.
Despite escalating geopolitical tension in the Middle East, positive developments surrounding the US-China trade talks turned out to be one of the key factors boosting investors’ appetite for riskier assets.
The downside, however, remained limited, at least for the time being, as traders now await decisions from major central banks – including the ECB and the Fed, before placing any directional bets.
Hence, it will be prudent to wait for a strong follow-through selling before confirming that the commodity might have topped out in the near-term and positioning for any further corrective slide.
Technical levels to watch