Gold steadies near $1,500 as trading action turns subdued ahead of Jackson Hole
- 10-year US Treasury bond yield retreats from highs.
- US Dollar Index looks to post modest daily losses after dismal PMI data.
- Hawkish Fed commentary helps the index rebound from lows.
After dropping to its lowest level in nine days at $1,492 earlier today, the XAU/USD pair staged a recovery in the second half of the day and now seems to be moving sideways near the $1,500 mark, losing nearly $3 on a daily basis.
During the European trading hours, upbeat PMI data from Germany and the eurozone and heightened hopes of the UK and the EU coming to terms to prevent a no-deal Brexit amid the softer tone adopted both by British Prime Minister Boris Johnson and French President Macron caused risk-on flows to dominate the markets and made it difficult for the safe-haven precious metal to find demand.
The 10-year US Treasury bond yield gained more than 2.5% to reflect the upbeat sentiment and Wall Street's main indexes started the day in the positive territory.
However, the Flash US PMI report published by Markit Economics today showed that the Manufacturing PMI in August dropped below the 50 threshold for the first time in nearly ten years and showed contraction in the sector's business activity. Additionally, the Services PMI fell to 50.9 and missed analysts' estimate of 52.8. The disappointing data weighed on the Greenback and allowed the pair to reverse its direction.
Attention shifts to Fedspeak
The US Dollar Index (DXY) slumped to a daily low of 98.08 after the PMI data to reveal increasing selling pressure on the currency. Later in the session, however, Philly Fed President Harker argued that there was no need for further stimulus at the moment and said that the central bank shouldn't continue to cut its policy rate to help the Greenback show stray resilient against its peers. At the moment, the DXY is down 0.1% on the day at 98.15.
Several FOMC members will be giving TV interviews on the sidelines of the Jackson Hole symposium. Later in the day, FOMC Chairman Powell will be delivering his prepared remarks at 14 GMT.
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.
