Gold clings to small daily gains above $1,530 ahead of US data
- 10-year US Treasury bond yield edges lower on Tuesday.
- US Dollar Index pushes carries winning streak into fifth straight day.
- Coming up: Markit and ISM Manufacturing PMI reports from US.
Despite the broad-based USD strength, the XAU/USD pair is posting modest daily gains on Tuesday as the risk-averse atmosphere helps the precious metal find demand. As of writing, the pair was up $2 on the day at $1,532.
US-China trade tensions re-escalate
On Sunday, 15% additional US tariffs on Chinese imports went into effect and China announced that they filed a complaint against that action with the World Trade Organization. However, with the US markets enjoying the long Labor Day weekend, the market reaction remained relatively muted.
As the bond markets reopened today, the 10-year US Treasury bond yield lost more than 1% to reveal that this latest development had a modestly negative impact on the market sentiment. Reflecting the risk-off atmosphere, major European equity indexes are posting losses on Tuesday and the S&P 500 Futures is erasing 0.75% to suggest that Wall Street is likely to start the day deep in the negative territory.
On the other hand, the heavy selling pressure surrounding major European currencies continue to provide a boost to the Greenback and makes it difficult for the pair to gain traction. At the moment, the US Dollar Index is staying at its highest level in more than two years at 98.30. Later in the session, the IHS Markit and the ISM Manufacturing PMI reports from the US will be looked upon for fresh impetus. Investors will also be paying close attention to Wall Street's main indexes' performances.
Technical levels to watch for
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.
