- Gold price gains positive traction for the third successive day on Wednesday.
- Retreating US bond yields undermines the US Dollar and lends some support.
- China's economic woes further boost demand for the safe-haven XAU/USD.
- Eyes global PMIs for some impetus ahead of the Jackson Hole Symposium.
Gold price attracts some dip-buying on Wednesday and stalls the overnight modest pullback from the $1,904-$1,905 region, or a multi-day peak. The XAU/USD climbs back above the $1,900 mark during the Asian session, though any meaningful appreciating move remains elusive in the wake of firming expectations that the Federal Reserve (Fed) will stick to its hawkish stance.
In fact, market participants now seem convinced that the Fed will keep interest rates higher for longer and have been pricing in the possibility of one more 25 basis points (bps) lift-off by the end of this year. This led to the recent rise in the US Treasury bond yields and dragged the non-yielding Gold price to its lowest level since mid-March, around the $1,885 area earlier this week. That said, a combination of supporting facts assists the XAU/USD to stage a modest recovery and gain some positive traction for the third successive day.
The yield on the benchmark 10-year US government bond retreats after surging to a nearly 16-year high on Tuesday and prompts some profit-taking around the US Dollar (USD). A softer Greenback tends to benefit the US Dollar-denominated Gold price. Apart from this, concerns about the worsening economic conditions in China lend additional support to the safe-haven precious metal and remain supportive of the ongoing recovery move. Traders, however, might refrain from placing aggressive bets ahead of the Jackson Hole Symposium.
Investors will closely scrutinize comments by Fed Chair Jerome Powell for fresh cues about the future rate-hike path, against the backdrop of growing acceptance of a pause in September. This, in turn, will play a key role in influencing the near-term USD price dynamics and determine the next leg of a directional move for the Gold price. Heading into the key event risk, the flash PMI prints might provide an insight into the global economic health and contribute to producing short-term trading opportunities around the XAU/USD.
The aforementioned fundamental backdrop, meanwhile, warrants some caution for aggressive bullish traders. Hence, it will be prudent to wait for a sustained strength back above the technically significant 200-day Simple Moving Average (SMA), around the $1,907 area, before confirming that the Gold price has bottomed out.
Technical levels to watch
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