Gold slumps to $1,480 area on Brexit hopes

• Risk-on flows dominate the markets in the American session on Tuesday.
• Reports claim that sides are closing in on a Brexit deal.
• 10-year United States Treasury bond yield adds 1%.

The troy ounce of the precious metal continued to weaken in USD terms in the American trading hours as markets cheered reports claiming that the European Union (EU) and the United Kingdom (UK) are closing in on a draft Brexit deal that could be announced before the end of the day on Tuesday. After slumping to a daily low of $1,477, the XAU/USD pair recovered modestly and was last seen trading at $1,482, losing more than $10, or 0.7% on a daily basis.

Eyes on Brexit developments

Citing two sources familiar with talks, Bloomberg said that the EU and the UK negotiators made progress in today’s talks in Brussels and now were closer than ever before to reach a Brexit deal. Although a senior EU official said it would be “way too premature” to say that a deal was imminent, the market sentiment remained upbeat and made it difficult for safe-haven assets such as gold to find demand.

Reflecting the strong risk appetite, the 10-year United States (US) Treasury bond yield quickly erased all of its daily losses and was last up 1% on the day. Moreover, the UK’s FTSE Index closed the day 1.2% higher and Wall Street’s main indexes gained traction following a quiet start to the day.

On the other hand, the sharp upsurge witnessed in the GBP/USD pair following the latest Brexit developments weighed on the USD and allowed the pair to limit its losses for the time being. The US Dollar Index, which spent the majority of the day moving sideways above the 99.50 handle, was last seen at 98.30, losing 0.12% on the day.

Technical levels to watch for