Gold clings to daily recovery gains above $1280

Risk aversion helps precious metal find demand.
US Dollar Index rises for the third straight day.
Wall Street looks to open the day in the negative territory.

Eren Sengezer FXStreet

After losing $5 on Tuesday, the troy ounce of the precious metal gained value today with the sour market sentiment ramping up the demand for traditional safe-havens. At the moment, the XAU/USD pair is up 0.4%, or $5.3, on the day at $1284.70.

With the ongoing U.S.-China trade conflict not showing any signs of slowing down, investors are opting out to stay away from risk-sensitive assets. Following a more-than-2% fall on Tuesday, the 10-year US Treasury bond extended its slide and was last seen losing 1.65% to reflect the dismal market mood. Meanwhile, the S&P 500 Futures is erasing 0.7% on the day and hints at a negative opening on Wall Street.

The fact that there won't be any significant macroeconomic data releases from the U.S. today suggests that the risk perception is likely to continue to dominate the market action.

On Thursday, the U.S. Bureau of Economic Analysis will release its second estimate of the first quarter GDP growth, which is expected to tick down to 3.1% from 3.2%. During the Asian session on Friday, Manufacturing and Non-Manufacturing PMI data from China will be looked upon for fresh impetus as a positive reading could help the risk appetite return to markets and vice versa.

Technical levels to consider

The pair could face the initial resistance at $1285 (20-DMA/20-DMA/daily high) ahead of $1291 (May 8 high) and $1297 (100-DMA). On the downside, supports could be seen at $1279 (daily low), $1272 (200-DMA) and $1269 (May 21 low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.