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  • Headlines surrounding US-China trade dispute weighs on risk sentiment.
  • US Dollar Index looks to close third straight day in red.
  • 10-year US Treasury bond erases more than 1.5% on Monday.

The precious metal gathered strength during the American trading hours on Monday as the latest developments about  the United States (US)-China trade conflict caused investors to look for safe assets. The XAU/USD pair, which fell to $1,456 earlier in the day, rose to a daily high of $1,474 and is now consolidating its daily gains around $1,472, adding 0.3% on a daily basis.

CNBC’s Beijing Bureau Chief, Eunice Yoon, on Monday reported that China was not optimistic about reaching a trade deal with the US.  “Strategy now to talk but wait due to impeachment, US election. Also, prioritize China economic support,” Yoon tweeted out.

With the initial market reaction, the 10-year US Treasury bond yield fell sharply to reflect the flight-to-safety and now looks to close the day with a loss of more than 1.5%.

USD weakens ahead of FOMC minutes

On the other hand, the Federal Reserve on Monday stated  that the Federal Open Market Committee (FOMC) Chairman Jerome Powell met with US President Donald Trump and Treasury Secretary Steven Mnuchin.

Commenting on that event, President  Trump said that they have discussed “interest rates, negative interest, low inflation, easing, dollar strength,” to weigh on the greenback and help the pair preserve its bullish momentum. At the moment, the US Dollar Index is erasing 0.25% on the day at 97.75. The next significant driver for the USD will be the FOMC’s October meeting minutes, which will be released on Wednesday.

Technical levels to watch for