- Gold regains positive traction on Wednesday amid escalating US-China tensions over Taiwan.
- The emergence of fresh USD selling turns out to be another factor lending support to the metal.
- The overnight hawkish remarks by several Fed officials keep a lid on any meaningful upside.
Gold attracts some dip-buying near the $1,755 region on Wednesday and stalls the previous day's sharp retracement slide from a four-week high. The XAU/USD maintains its bid tone through the first half of the European session and is currently trading around the $1,766 area, just below the daily high.
Heightened geopolitical tensions caused by US House Speaker Nancy Pelosi's Taiwan visit turns out to be a key factor offering support to the safe-haven gold. China condemned the highest-level US trip to Taiwan in 25 years and responded with a flurry of military exercises, and announcing the suspension of several agricultural imports from Taiwan.
The intraday uptick is further supported by the emergence of some US dollar selling, which tends to benefit the dollar-denominated commodity. A mixed performance around the US Treasury bond yields fails to assist the USD to capitalize on the overnight bounce from a multi-week low, though bets for further Fed rate hikes help limit losses.
In fact, several Fed officials sounded hawkish on Tuesday and hinted that more interest rate hikes are coming in the near term. The markets were quick to react and assist the US Treasury bond yields to recover swiftly from their lowest level since April. This is holding back bulls from placing aggressive bets around the non-yielding gold.
Furthermore, investors seem reluctant and prefer to wait for a fresh catalyst before positioning for the resumption of the recent recovery from the $1,680 area, or a 15-month low touched in July. Hence, the market focus would remain glued to the release of the closely-watched US monthly jobs report - popularly known as NFP on Friday.
The data would play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for gold. In the meantime, traders on Wednesday might take cues from the release of the US ISM Services PMI. This, along with the US bond yields, could drive the USD demand and provide some impetus.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats from daily highs, holds above 1.0800
EUR/USD loses traction but holds above 1.0800 after touching its highest level in three weeks above 1.0840. Nonfarm Payrolls in the US rose more than expected in June but downward revisions to May and April don't allow the USD to gather strength.
GBP/USD struggles to hold above 1.2800 after US jobs data
GBP/USD spiked above 1.2800 with the immediate reaction to the mixed US jobs report but retreated below this level. Nonfarm Payrolls in the US rose 206,000 in June. The Unemployment Rate ticked up to 4.1% and annual wage inflation declined to 3.9%.
Gold approaches $2,380 on robust NFP data
Gold intensifies the bullish stance for the day, rising to the vicinity of the $2,380 region following the publication of the US labour market report for the month of June. The benchmark 10-year US Treasury bond yield stays deep in the red near 4.3%, helping XAU/USD push higher.
Crypto Today: Bitcoin, Ethereum and Ripple lose key support levels, extend declines on Friday
Crypto market lost nearly 6% in market capitalization, down to $2.121 trillion. Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) erased recent gains from 2024.
French Elections Preview: Euro to “sell the fact” on a hung parliament scenario Premium
Investors expect Frances's second round of parliamentary elections to end with a hung parliament. Keeping extremists out of power is priced in and could result in profit-taking on Euro gains.