- Fading prospects for aggressive Fed rate cuts continue to weigh on the commodity.
- Recovering US bond yields underpin the USD and contribute to the weaker tone.
- Wednesday's key focus will remain on Powell's testimony and FOMC minutes.
Gold held on to its mildly negative tone through the early European session on Wednesday and is currently place at the lower end of its daily range, around the $1390 region.
As investors continue to scale back expectations for aggressive interest rate cuts by the Fed, a strong follow-through uptick in the US Treasury bond yields turned out to be one of the key factors driving flows away from the non-yielding yellow metal.
Meanwhile, the US Dollar held steady near three-week tops and further collaborated towards capping the overnight attempted bounce from one-week lows, rather exerted some additional downward pressure on the dollar-denominated commodity.
The ongoing slide seemed unaffected by the prevalent cautions mood around equity markets, which tends to underpin the precious metal’s safe-haven demand, with some repositioning trade ahead of Wednesday’s key event risk further contributing to the weaker tone.
All eyes remain glued to the Fed Chair Jerome Powell's two-day semiannual testimony before the Congress, starting this Wednesday, which will be closely scrutinized for fresh clues over the central bank's near-term monetary policy outlook.
This will be followed by the release of June FOMC meeting minutes - due later during the US trading session, and should play a key role in determining the commodity’s next leg of a directional move, though uncertainty over US-China trade talks might help limit the downside.
Technical levels to watch
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