Gold price drops toward $1,500 as risk-on flows start to dominate

London (Oct 9)  After closing the previous day with strong gains, the troy ounce of the precious metal rose to a fresh daily high of $1,511earlier on Wednesday but lost its traction as the improving risk sentiment weighed on the safe-haven assets. As of writing, the XAU/USD pair was down 0.2% on the day at $1,502.50.

The latest headlines surrounding the United States (US) - China trade conflict seem to be allowing risk-on flows to take control of the market action.

Earlier in the day, citing an official with direct knowledge of the matter, Bloomberg reported that China was open to making a partial trade deal with the US despite the fact that the Chinese Foreign Ministry on Tuesday said that they are prepared to retaliate to the United States' (US) backlisting of the Chinese technology firms.

Moreover, reports of China ramping up agricultural imports from the US is seen as a sign toward China's willingness to ease the tensions ahead of Thursday's high-level negotiations in Washington. Reflecting the upbeat mood, the 10-year US Treasury bond yield is adding around 1.5% on a daily basis.

The focus will be on FOMC minutes in the American session

Meanwhile, ahead of the Federal Open Market (FOMC) Chairman Jerome Powell's speech at 15:00 GMT, the US Dollar Index is staying calm near the 99 handle to allow the risk perception to remain as the sole driver of the pair's action. More importantly, the FOMC will be releasing the minutes of its September meeting later in the US evening.

FXstreet