Gold erases majority of daily gains, continues to trade above $1,460
|- 10-year US Treasury bond yield gains more than 1% on Tuesday.
- Hopes of US delaying December 15 tariffs boost sentiment.
- US Dollar Index drops below 97.50 ahead of FOMC.
The troy ounce of the precious metal rose to a daily high of $1,468.68 during the early trading hours of the American session but erased a large portion of its gains amid recovering risk sentiment. As of writing, the XAU/USD pair was up 0.08% on the day at $1,463.
Earlier in the day, the lack of positive developments surrounding the US-China trade conflict caused investors to remain cautious and boosted the demand for traditional safe havens such as gold. However, after the Wall Street Journal reported that the US was planning to delay the December 15 tariff hike on Chinese imports, risk appetite returned to markets and weighed on the pair.
Additionally, White House acting chief of staff Mick Mulvaney said the trajectory toward a phase one trade deal with China was "pretty good." Reflecting the upbeat mood, the 10-year US Treasury bond yield made a sharp U-turn and was last up 1.2% on the day at 1.845%. Furthermore, after starting the day in the red, Wall Street's main indexes moved into the positive territory.
Focus shifts to FOMC
On the other hand, the greenback struggled to find demand ahead of the FOMC's monetary policy announcements on Wednesday and the US Dollar Index fell below the 97.50 mark to help the pair limit its losses for the time being.
Previewing the FOMC meeting, "the last FOMC minutes made it clear that most participants judge that the current stance of monetary policy is now well-calibrated and that another cut would require the outlook to materially change,” noted Nordea Markets analysts. “The Fed will therefore likely take a wait-and-see approach, evaluating the effects of monetary easing on incoming data."
Technical levels to watch for
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