Gold ticks higher, lacks follow-through
- Gains some traction following the biggest single-day fall since September 25.
- The prevalent cautious mood underpinned the commodity's safe-haven status.
- US-China trade optimism might continue to keep a lid on any strong recovery.
Gold edged higher on Wednesday and recovered a part of the overnight sharp fall to three-week lows, albeit seemed struggling to capitalize on the attempted bounce.
A combination of negative forces exerted some heavy downward pressure on Tuesday and led to the precious metal's biggest single-day drop since September 25. The US Dollar remained well supported by growing optimism over a possible US-China trade deal later this month and was seen as one of the key factors weighing on dollar-denominated commodities – including Gold.
Upside seems limited
The already stronger USD got an additional boost following the release of better-than-expected US ISM Non-manufacturing PMI. This coupled with a strong upsurge in the US Treasury bond yields further aggravated the intraday bearish pressure surrounding the non-yielding yellow metal, taking along some short-term trading stops near the key $1500 psychological mark.
As investors digested the latest US-China trade news, the prevalent cautious mood around equity markets extended some support to the precious metal's perceived safe-haven status and helped gain some positive traction on Wednesday. However, the uptick lacked any strong bullish conviction and runs the risk of fizzling out rather quickly amid absent relevant market moving economic releases.
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.
