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  • Wall Street pushes lower following three-day winning streak.
  • 10-year US Treasury bond yield fails to break above 1.6%.
  • US Dollar Index finds resistance before testing 98.50.

The XAU/USD pair took advantage of the risk-off flows earlier in the day and erased a large portion of the losses it suffered on Monday. After touching a daily high of $1,508.45, however, the precious metal lost its strength and edged lower toward the $1,500 handle. As of writing, the pair was still up 0.43% on the day at $1,502.40.

The positive impact of the US decision to delay the Huawei ban for 90 days faded away today after China’s Commerce Ministry said that they were dissatisfied with the US action as it also included the addition of 46  Huawei subsidiaries to the entity list.  

The 10-year US Treasury bond yield reversed its direction before breaking above 1.6% and erased yesterday’s gains amid souring market sentiment and was last down 2.45% on the day at 1.559%. Reflecting the dominating flight-to-safety, Wall Street’s main indexes started the day in the negative territory and now look to snap the three-day winning streak.

USD stays relatively calm ahead of FOMC minutes

On the other hand, the Greenback gathered strength with the uncertainty surrounding European politics and Brexit allowed the currency to attract investors. After rallying to its highest level since August 1 at 98.45, the US Dollar Index lost its traction in the American trading hours to help the pair continue to float above the critical $1,500 mark.

On Wednesday, the FOMC will be releasing the minutes of its August meeting and markets will be looking to see if the Fed is willing to cut rates in September. Until then, the pair is likely to stay neutral unless it makes a decisive break below $1,500. Yesterday, Boston Fed President Rosengren argued that there was no need to make any changed to the monetary policy if the outlook remained on track.

Technical levels to watch for