- Escalating geopolitical tensions boosted the commodity’s safe-haven appeal.
- A modest USD uptick/US-China trade optimism kept a lid on any strong gains.
- The focus remains glued to this week’s highly anticipated FOMC policy meeting.
Gold held steady above the key $1500 psychological mark through the mid-European session on Monday and was seen consolidating the weekly bullish gap of around 1%.
Drone strikes on the world's two largest crude-processing facilities in Saudi Arabia heightened tensions in the Middle East and provided a strong boost to traditional safe-haven assets - including Gold - on the first trading day of a new week.
Diverging factors failed to provde fresh impetus
Yemen's Iran-backed Houthi rebel group claimed responsibility for the attack, which knocked out more than 5% of global oil supply, but the US pointed the finger directly at Iran and triggered a fresh wave of the global risk-aversion trade.
The global flight to safety was further reinforced by a sharp downfall in the US Treasury bond yields, which provided an additional boost to the non-yielding yellow metal and remained supportive of the strong bid tone on Monday.
However, a modest pickup in the US Dollar demand, which tends to drive flows away from dollar-denominated commodities like Gold, coupled with the recent encouraging US-China trade developments kept a lid on any strong follow-through
Investors also seemed reluctant to place any aggressive bets, rather preferred to stay on the sidelines ahead of critical monetary policy update from major central banks this week, which further collaborated to a subsequent range-bound action.
The Fed is expected to cut interest rates at the end of a two-day policy meeting on Wednesday and will be followed by BoJ, BoE and SNB policy meetings on Thursday, which might dictate the next leg of a directional move for the metal.
Technical levels to watch
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