Gold climbs to daily highs near $1,507 as US T-bond yields extend slide
- Tensions remain high in the Middle East following the attack on Saudi oil facilities.
- 10-year US Treasury bond yield loses more than 2% on Wednesday.
- US Dollar Index struggles to find direction ahead of the FOMC's interest rate announcement.
The souring market sentiment in the second half of the day seems to be providing a boost to the safe-haven gold. As of writing, the XAU/USD pair was trading at fresh daily highs near $1,507, adding more than $5, or 0.4% on a daily basis.
Markets turn risk-averse on Wednesday
Ahead of the Federal Reserve's monetary policy decisions later today, the 10-year US Treasury bond yield is losing more than 2% on the day to suggest that investors are staying away from risk-sensitive assets. Reflecting the dismal mood, Wall Street's three main indexes stay in the negative territory.
Previewing the event, “We expect the Fed to cut the target range for the federal funds rate by 25 bps on September 18,” Rabobank analysts said.
"In our view, the feedback loop between trade policy and monetary policy is likely to lead to another insurance cut before the end of the year, most likely in October.”
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Markets also seem to be reacting to US President Donald Trump's response to the attack on the Saudi oil facilities. Earlier today, Trump tweeted out that he instructed the Secretary of the Treasury to "substantially increase" sanctions on Iran, keeping the geopolitical tension high in the Middle East.
Meanwhile, the US Dollar Index, which tracks the dollar's value against a basket of six major currencies, stays calm in its daily range below the 98.50 handle, allowing the risk perception to continue to drive the pair's action.
Technical levels to watch for