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Gold clings to modest gains above critical $1,500 handle

  • 10-year US Treasury bond yield erases more than 2%.
  • Risk sentiment is likely to remain as the primary driver of Gold’s valuation.
  • Greenback remains on the back foot on Monday.

After advancing to its highest level since April 2013 at $1,510 last Wednesday, the XAU/USD pair moved sideways near the $1,500 mark on Thursday and Friday and continues to have a difficult time setting its next short-term direction today. As of writing, the pair was posting modest daily gains at $1,501.65.

Although the pair looks technically overbought, markets don’t seem to be willing to bet on a deep correction amid a lack of positive developments that could improve the market sentiment.

On top of the ongoing US-China trade conflict, escalating tensions in Hong Kong and the Middle East ramp up the demand for traditional safe-havens such as the precious metal. Reflecting the markets’ willingness to stay away from risky assets, the 10-year US Treasury bond yield is losing nearly 2.5% on the day and Wall Street looks to open the in the negative territory.

Meanwhile, falling US Treasury bond yields and reports of the Federal Reserve considering the option to use countercyclical capital buffers if the economy were to show signs of overheating weigh on the Greenback to help the pair float in the positive territory. At the moment, the US Dollar Index is at its session low of 97.35.

Technical levels to watch for

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