By Barani Krishnan
Investing.com - It took exactly a month, but gold returned briefly on Tuesday to where longs in the game longed it to be — the key $1,800 level.
The benchmark gold futures contract on New York’s Comex, December, rose to $1,804.95 an ounce before settling the day at $1,789.70, up $2.
The yellow metal came off its peaks as the dollar — a contrarian trade to gold — had its biggest ramp-up in nearly a month, reacting to China’s fury over U.S. House Speaker Nancy Pelosi’s visit to Taiwan, a republic Beijing regards as its territory with no sovereignty of its own.
It has taken some toiling for Comex gold to return to the psychologically-important bullish mark it was forced off on July 1, amid the meteoric rally in the dollar then on bets for higher-and-higher Federal Reserve rate hikes.
“The futures blew off some froth at the top, but the upside is still very much intact,” said Sunil Kumar Dixit, chief technical strategist at skcharting.com. “The game isn’t over until Comex gets to at least $1,830 or $1,835.”
The Dollar Index, which pits the greenback against after six major currencies, was up almost 0.7% at 105.95, its most in a day since a 1.3% rally on July 5. The session high was 106.10. Earlier on Tuesday, the greenback gauge made a near three-week low of 104.92.
U.S. bond yields joined the dollar in pressuring gold off Tuesday’s highs, as the benchmark 10-year Treasury note had its strongest one-day rally since March.
The spot price of bullion, which often moves closely with gold futures, did not get to $1,800, peaking at just $1,788.12.
Comex gold’s pivot towards $1,800 came after Federal Reserve Chair Jerome Powell said last Wednesday that the central bank couldn’t predict if it’ll hold on to the aggressive rate hikes it had carried out since March to beat inflation.
The yellow metal gained more fervor a reading on the second quarter US gross domestic product on Friday technically placed the U.S. economy in a recession.
The notion of recession and peaking Fed rate hikes sent gold up 2.2% last week for its best weekly performance since the week to Feb. 25.