Gold slumps to $1,490 area on rallying US T-bond yields
- Wall Street's main indexes push higher on Monday.
- 10-year US Treasury bond yield gains more than 3%.
- US Dollar Index moves sideways ahead of this week's key events.
The XAU/USD pair spent the Asian session moving sideways above the $1,500 handle but lost its traction during the American trading hours as the latest headlines surrounding the US-China trade dispute and Wall Street's strong performance at the opening made it difficult for safe-haven assets find demand. As of writing, the pair was down nearly 1% on the day at $1,490.
Positive mood weighs on gold
After posting gains for the third straight week, the 10-year US Treasury bond yield rose sharply on Monday and was last seen adding more than 3% to confirm the upbeat market sentiment.
US President Donald Trump earlier in the day said that they were expecting to finalize phase one of the trade deal with China at the APEC summit in Chile. "We are looking to be ahead of schedule to sign phase one of the US-China trade deal," Trump added to boost the risk appetite.
On the other hand, the US Dollar Index has gone into a consolidation stage after closing the previous week higher and is likely to stay quiet until Wednesday's economic growth data and the Federal Reserve's monetary policy decisions.
Previewing the event, "The recent easing of downside risks to the global growth outlook from US-China trade tensions and No Deal Brexit risk have also helped to lift US yields," said analysts at MUFG Bank. "The 10-year US Treasury bond yield has risen to just over 1.8% after hitting a low of 1.5% at the start of this month. US rate market participants still expect the Fed to follow through and cut rates by a further 25 basis points this week although it is now seen as more likely to be the last rate cut delivered this year.”
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.
