- Improving global risk sentiment exerted some initial downward pressure.
- Concerns about global economic growth helped limit further losses.
Gold reversed an early dip to $1530 area and has now climbed to the top end of its daily trading range.
Despite fading optimism over a quick resolution of the prolonged US-China trade dispute, a slight improvement in the global risk sentiment – as depicted by stability in equity markets – weighed on the precious metal’s safe-haven appeal.
Recessionary fears continue to lend some support
This coupled with a modest US Dollar uptick exerted some downward pressure on the dollar-denominated commodity and collaborated to the early downtick, albeit concerns about global economic growth helped limit further losses.
The ongoing fall in the longer-term US Treasury bond yields deepened the inversion of the US yield curve to the lowest level since 2007 and continued fueling worries about a recession and underpinned the non-yielding yellow metal.
However, the fact that the US President Donald Trump softened his tone against China and predicted that the two countries will be able to reach a trade deal might keep a lid on any strong up-move, at least for the time being.
Hence, it will be prudent to wait for a follow-through buying before traders start positioning for the resumption of the prior bullish trajectory amid absent relevant market-moving US economic releases on Wednesday.
Technical levels to watch
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