Gold stays flat below $1280, can FOMC's Powell wake up markets?
|- The XAU/USD pair trades in a $5 range on Monday.
- US Dollar Index stays in tight range below 98.
- 10-year US T-bond yield stages modest recovery.
The XAU/USD pair pushed lower in the early trading hours of the European session to touch its lowest level in more than two weeks at $1273.75. Although the pair was able to find support there, it has struggled to stage a meaningful recovery and gone into a consolidation phase below $1280. As of writing, the troy ounce of the precious metal was down $0.5 at $1277.35
Amid the fact that there were no fresh developments surrounding the U.S.-China trade conflict, which became the primary driver of the market's risk perception, the 10-year US Treasury bond yield rebounded today to suggest that investors don't feel the need to flee to safer assets to make it difficult for gold to find demand.
Nevertheless, investors don't expect the trade war to be resolved anytime soon and we could continue to see shifts in the market sentiment. In a recently published article, Chinese news outlet Global Times reported that China's Foreign Ministry said President Donald Trump's claim that China broke a trade deal was an attempt to muddy the waters and shift blame."It was the US' maximum pressure that led to there being no deal in the latest trade talks," Global Times wrote.
On the other hand, the US Dollar Index continues to move sideways a little below the 98 handle, not impacting the pair's action today. Later in the session, investors will be paying close attention to FOMC Chairman Powell's speech. Although it's unlikely, any comments on the policy outlook could trigger a sharp market reaction.
Technical levels to watch for
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