- The US dollar bounce caps the upside in gold, what’s next?
- Downbeat US CB consumer confidence data to refuel the recovery-rally.
Gold futures on Comex entered into a consolidative near $ 1216 region heading into Europe, having hit fresh two-week highs at $ 1218.90.
The retreat in the yellow metal is mainly driven by broad-based US dollar bounce from three-week lows of 94.68, as risk sentiment got boosted on optimism fuelled by the US-Mexico trade deal. Moreover, the renewed selling in the Chinese Yuan on the PBOC move also helped put a bid under the US dollar.
Despite the latest leg lower, the precious metal keeps the bullish momentum intact amid flattening of the US yield curve, which could cap the dollar recovery. Further, a dip in the US CB consumer morale could offer a fresh lift to the USD-sensitive gold.
Meanwhile, Stephen Innes, Asia-Pacific trading head at OANDA in Singapore, noted: “We need a complete flip around momentum in the U.S. dollar for gold to push above $1,230 and move to $1,260. Unless the Fed takes the December rate hike off the table, gold does not have a chance to get near any of those supportive levels.”
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