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  • Not so positive trade-related headlines provided a minor lift earlier this Monday.
  • A modest pickup in the US bond yields underpinned the USD and capped gains.
  • Investors now look forward to Powell’s scheduled speech for some fresh impetus.

Gold finally broke down of its Asian session consolidation phase and dropped to fresh session lows, around the key $1500 psychological mark in the last hour.
Following a good two-way price action on Friday, the precious metal opened with a modest bullish gap in reaction to reports that Chinese officials are reluctant to agree to a broad trade deal pursued by the US President Donald Trump and want the scope of this week’s trade talks to be narrow.

Renewed USD strength offset weaker risk sentiment

Renewed trade-related pessimism led to a slight deterioration in the global risk sentiment and was evident from a weaker trading sentiment around equity markets, which eventually turned out to be one of the key factors underpinning demand for traditional safe-haven assets – including Gold.
However, a modest US Dollar uptick kept a lid on any strong follow-through move up for the dollar-denominated commodity Gold. As investors looked past Friday’s mixed US jobs report, a goodish pickup in the US Treasury bond yields helped the Greenback to regain some traction on the first day of a new trading week.
It is worth recalling that the latest US employment details showed that the US economy created less-than-expected 136K jobs in September as compared to the previous month’s upwardly revised reading of 168K and the unemployment rate unexpectedly dropped to a near 50-year low level of 3.5%.
The data did little to influence Fed rate cut expectations, turning the market focus to the Fed Chair Jerome Powell’s scheduled speech on Monday. Powell’s comments will be closely scrutinized for clues about the central bank’s policy outlook and eventually provide a fresh directional impetus to the non-yielding yellow metal.

Technical levels to watch