- Gold regained some traction on Tuesday amid weaker USD, worsening US-China relations.
- The upbeat market mood dented the commodity’s safe-haven status and capped the upside.
- A sustained break below $1722-20 support needed to confirm any near-term bearish bias.
Gold struggled to capitalize on its early uptick and retreated to the lower end of its daily trading range during the early European session. The intraday pullback lacked any strong follow-through and the commodity, so far, has managed to hold above the $1722-20 support zone.
The precious metal managed to regain some positive traction on Tuesday and reversed the previous day’s modest downtick, albeit remained well within a three-day-old trading range. The uptick was sponsored by a broad-based US dollar weakness, which tends to undermine demand for the dollar-denominated commodity.
This coupled with concerns about worsening US-China relations further benefitted the precious metal’s safe-haven status. It is worth recalling that diplomatic tensions between the world’s two largest economies escalated further after China last week tabled national security laws for both Hong Kong and Macau.
However, the upbeat market mood, as depicted by a strong rally in the equity markets and reinforced by a goodish pickup in the US Treasury bond yields, capped the upside for the non-yielding yellow metal. Hence, it remains to be seen if the commodity is able to attract some dip-buying at lower levels or breaks through the mentioned $1722-20 support.
Moving ahead, market participants now look forward to the release of the Conference Board’s US Consumer Confidence Index for some short-term trading impetus. Apart from this, any further escalation in the US-China tensions will influence the broader market risk sentiment and contribute towards producing some meaningful trading opportunities.
Technical levels to watch
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