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  • Wall Street’s main indexes fall sharply on Wednesday.
  • 10-year United States (US) Treasury bond yield is down nearly 3%.
  • US Dollar Index edges lower toward the 99 mark.

The XAU/USD pair build on Tuesday recovery gains and rose above the critical $1,500 mark before going into a consolidation phase a little below that level. As of writing, the pair was up nearly $20, or 1.35%, on the day at $1,499.

Risk-aversion continues to dominate the markets

The protracted selling pressure surrounding the Greenback and risk-off flows on Wednesday seem to be driving the pair higher.

Heightened fears of a possible recession in the United States after the Institue for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) data on Tuesday showed that the business activity in the manufacturing sector contracted at its strongest pace in nearly ten years, caused risk-off flows to take control of the market action.

The 10-year US Treasury bond yield is now losing nearly 3% on the day and Wall Street’s three main indexes are all down around 2% to confirm the sour market sentiment.

Earlier in the day, the Automatic Data Processing’s (ADP) monthly report revealed that private sector employment in the US increased by 135,000 to miss the market expectation of 140,000 and forced the US Dollar Index (DXY) to push lower. At the moment, the DXY, which tested the 99 handle in the last hour, was erasing 0.1% at 99.10.

There won’t be any other macroeconomic data releases from the US in the remainder of the day and the performance of major equity indexes in Asia is likely to impact the precious metal’s action in the early trading hours of the Asian session.

Technical levels to watch for