Gold steadies near 7-month tops above $ 1300, focus on Fed, trade talks

Gold (futures on Comex) are seen trading back and forth in a tight range above the 1300 psychological mark, although remains within a striking distance of the seven-month tops reached at 1303.70 on Monday.

The yellow metal regained in the overnight trades and now remains in a bullish consolidative phase, as the risk-off trades fuelled by the US stocks slide extends into Asia, with markets nervous heading into the US-China trade talks set to resume later this week. Investors flock to safety in times of uncertainty and panic, especially in light of the latest WSJ report that cited unnamed sources saying that a big divide remains between the US and China on the trade front.

Despite the risk-aversion, the main driver behind gold’s upsurge is the increased expectations of a dovish FOMC monetary statement due out later this Wednesday, with markets already pricing in that the Fed will pause its policy normalization sooner than expected. The US dollar remains on the back foot versus its main competitors, sending the USD index to nine-day lows of 95.64.

Meanwhile, the safe-haven gold also continues to derive support from mounting global economic slowdown worries, with the negative impact of the US government shutdown to weigh on the US economy while the recent economic readings on Germany and France have accentuated slowdown worries in Europe.

In the day ahead, gold will continue to get influenced by the sentiment on the global stock markets while pre-Fed caution trading is also likely to keep the prices supported above the 1300 levels. Next of note for the markets remains the US CB consumer confidence data for fresh dollar trades.

Gold Technical Levels