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Gold retraces small portion of daily drop, trade above $1,500

  • Rising US T-bond yields and stock indices weigh on safe-haven gold.
  • US Dollar Index fluctuates in very tight range above 98.
  • US decides to delay ban on Huawei for 90 days.

The troy ounce of the precious metal gained $15 last week and closed at $1,513 but failed to preserve its bullish momentum on Monday. With the market sentiment turning positive today, gold is having a hard time finding demand as a safe-haven. As of writing, the XAU/USD pair was down 0.8% on a daily basis at $1,501.50.

Eyes on US-China trade dispute

Earlier today, the Trump administration announced the decision to delay the ban on the Chinese telecom giant Huawei for 90 days to revive hopes of sides making forward progress in next round of face-to-face talks in September in Washington.

With the initial market reaction, the 10-year US Treasury bond, which fell to its lowest level since September 2016 last week, added as much as 5% on the daily chart and Wall Street’s main indexes opened the day sharply higher led by strong gains in technology shares. 

On the other hand, the lack of significant macroeconomic data releases on Monday allowed currencies to remain quiet and helped the pair limit its losses for the time being. After closing the previous week with a gain of more than 1%, the US Dollar Index is staying virtually flat on the day near the 98.20 handle.

Commenting on the impact of the US-China trade conflict on the Greenback, “If the Fed sees more certainty on the trade front, and higher valuations for shares, the pressure to loosen monetary policy would wane,” said FXStreet ANalyst Yohay Elam. “In turn, it would likely refrain from cutting interest rates in September and perhaps signal tighter monetary policy going forward. On this background, the greenback has room to rise – whether Trump is thrilled or not.”

Technical levels to watch for

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