Gold struggles to find direction, trades in tight range near critical $1,500 handle
- Saudi Arabia's output is expected recovery faster than initially thought.
- Industrial production in the US rose more than expected in August.
- 10-year US Treasury bond yield is down more than 2% on Tuesday.
The XAU/USD pair struggling to make a decisive move on Tuesday and continues to trade in a relatively tight range around the $1,500 handle. As of writing, the pair was up 0.3% on the day at $1,503.
Reports of Saudi Arabia's crude oil production returning to normal levels in the next two to three weeks helped the market sentiment recover in the second half of the day and made it difficult for the precious metal to continue to gather strength as a traditional safe-haven.
However, Wall Street's main indexes remain in the negative territory and the 10-year US Treasury bond yield is losing more than 2% on the day to suggest that risk-on flows are not strong enough to dominate the market.
USD weakens ahead of FOMC
On the other hand, the US Dollar Index, which spent the first half of the day in a tight range above 98.50, lost its traction during the American trading hours as investors are looking to reposition themselves ahead of the Federal Open Market Committee's monetary policy announcements. Despite the upbeat data that showed industrial production in the US rose 0.6% to beat the market expectation of 0.2%, the index is down 0.3% on the day at 98.33.
There won't be any other macroeconomic data releases in the remainder of the day. At 17:15 GMT, Saudi Arabia's oil minister is scheduled to update the press and we can see the pair react if his comments impact the market's risk perception.
Technical levels to consider