• The ongoing USD sell-off continues to drive the commodity higher. • Risk-on mood/pickup in the US bond yields seemed to cap gains.
Gold traded with a positive bias for the third consecutive session and touched a one-week high during the European session on Tuesday.
The precious metal extended its steady recovery from near 20-month lows and was further supported by the prevalent US Dollar selling bias, triggered by the US President Donald Trump's overnight comments.
Trump reiterated his displeasure over the Federal Reserve's monetary policy tightening and triggered a broad-based USD sell-off. Adding to this, optimism over the upcoming US-China trade talks was also cited as another headwind for the greenback and was eventually seen benefitting dollar-denominated commodities - like gold.
However, a goodish pickup in the US Treasury bond yields kept a lid on any runaway rally for the non-yielding yellow metal. This coupled with improving investors’ appetite for riskier assets, as depicted by positive tone around equity markets and which tends to undermine the precious metal's safe-haven demand, might further collaborate towards capping any meaningful up-move.
Moving ahead, this week's important release of the latest FOMC meeting minutes and the Fed Chair Jerome Powell's speech at the central bank symposium in Jackson Hole will now play a key role in determining the commodity's next leg of directional move.
Technical levels to watch
Immediate resistance is pegged near the $1200 handle, above which the commodity is likely to head towards testing the $1206 horizontal resistance. On the flip side, any meaningful retracement now seems to find some support near $1188 level and is closely followed by supports near the $1184 area and the $1180 region.
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