Gold slips to 1-week low, below $1325 level amid fading safe-haven demand
- Improving risk sentiment continues to weigh on the commodity’s safe-haven status.
- Positive US bond yields/a modest USD uptick further add to the prevalent selling bias.
- The downside is likely to remain limited amid speculations for a Fed rate cut in 2019.
Gold finally broke down of its Asian session consolidation phase and retested its immediate horizontal support near the $1325-24 region in the last hour.
The precious metal remained depressed for the second consecutive session on Tuesday and added to the overnight heavy losses - led by fading safe-haven demand amid encouraging trade-related development.
The US President Donald Trump suspended plans to impose tariffs on Mexico after the two countries reached an agreement on immigration and provided a strong boost to the global risk sentiment on Monday.
The risk-on mood was evident from a solid rebound in the US Treasury bond yields, which underpinned the US Dollar demand and exerted some additional pressure on the dollar-denominated commodity.
The yellow metal dropped to the mentioned support, albeit Trump's fresh threat to raise tariffs on imports from China extended some support and helped stage a late rebound during the US trading session.
The uptick, however, lacked any strong follow-through rather fizzled out quickly amid persistent improvement in the investors' appetite for riskier assets, as depicted by a positive mood around equity markets.
Meanwhile, the downside is likely to remain cushioned in the wake of firming market expectations that the Fed will eventually move to cut interest rates by the end of this year, which tends to benefit the non-yielding metal.
Hence, it would be prudent to wait for a strong follow-through selling before confirming that the commodity might have actually topped out in the near-term and positioning for any further near-term corrective fall.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
