Gold sticks to gains above $1,500 on risk aversion
|- Trump administration is reportedly planning to limit Chinese capital inflows.
- Wall Street's main indexes suffer heavy losses on Tuesday.
- US Dollar Index floats above the 99 handle.
After losing more than $15 on Monday, the troy ounce of the precious metal recovered its losses on Tuesday as the dismal market mood allowed safe-havens to find demand. As of writing, the XAU/USD pair was trading at $1,505, up 0.8% on a daily basis.
Fading trade optimism triggers risk-off flows
The Chinese Foreign Ministry on Tuesday said that they are prepared to retaliate to the United States' (US) backlisting of the Chinese firms. Later in the day, citing a source with knowledge of the matter, Bloomberg reported that the Trump administration was planning to limit capital flows from China into the US government pension fund. These headlines caused investors to flee to safer assets and helped the pair retrace Monday's fall.
Reflecting the risk aversion, Wall Street's three main indexes are all losing möore than 1% on Tuesday.
On the other hand, the heavy selling pressure surrounding major European currencies, especially the British Pound, seems to be providing a boost to the Greenback to cap the pair's gains for the moment. As of writing, the US Dollar Index was up 0.1% on the day at 99.08.
Later in the session, markets will be paying close attention to the Federal Open Market Committee (FOMC) Chairman Powell's and Chicago Fed President Evans' remarks.
Technical levels to watch for
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