- Not so dovish comments by Fed officials prompt some long-unwinding trade.
- Recovering US bond yields underpin the USD demand and added to weakness.
- Geopolitical tensions might help limit the downside ahead of Trump-Xi meeting.
Gold hovers near the lower end of its daily trading range, albeit has still managed to hold its neck above the key $1400 psychological mark.
The precious metal came under some intense selling pressure on Wednesday and extended the previous session’s sharp intraday pullback from multi-year tops, triggered by not so dovish comments by the Fed officials.
St Louis Fed President James Bullard – considered as the most dovish FOMC member, dismissed a 50bps rate cut, while the Fed Chair Jerome Powell said that it is important not to overreact to short-term swing in sentiment.
Against the backdrop of the recent upsurge and extreme overbought conditions on the daily chart, the comments prompted some long-unwinding trade and exerted some heavy pressure on the non-yielding yellow metal.
The downward spiral extended through the early European session on Wednesday and was further pressurized by the ongoing recovery in the US Dollar, which tends to undermine demand for the dollar-denominated commodity.
The commodity has now snapped seven consecutive days of winning streak, though the prevalent cautions mood extended some support to the precious metal’s safe-haven status and helped limit deeper losses, at least for the time being.
Investors might now be reluctant to place any aggressive bets amid escalating geopolitical tensions in the Middle East and ahead of the crucial Trump-Xi meeting at the G20 summit to discuss trade-related issues later this week.
In the meantime, Wednesday’s US economic docket – featuring the release of durable goods orders data will be looked upon for some short-term trading opportunities later during the early North-American session.
Technical levels to watch
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