Despite a widespread dollar weakness gold prices are struggling to regain a sustainable bullish impetus on Wednesday after a modest recovery yesterday. The bullion failed to break above the $1,286 intermediate resistance that is standing on the way to $1,290 and has settled above $1,280 during the latest trading.
It looks like the dollar relationship has fallen apart, at least in the short term, as the precious metal fails to derive support from a sell-off in the greenback. In part, gold is trading lower against the backdrop of firming equities, with trading conditions are thin today as many markets are closed for a public holiday. Investors shrugged off the latest weak Chinese business surveys and turned into a bullish mode after Trump agreed with Democratic leaders to spend $2 trillion on infrastructure.
The additional pressure on safe-haven metal comes from the latest round of US-China trade talks, with US Treasury Secretary Steven Mnuchin described the negotiations as productive and said the two countries will continue their talks in Washington next week. Hopes for resolving the trade dispute will likely further support riskier assets and cap the bullish attempts in gold prices. In the short-term, however, the yellow metal could turn positive if the Fed’s dovish tone puts the greenback under additional selling pressure.