Gold recovers modestly toward $1550 on latest US-China trade headlines

• Wall Street's three main indexes ease from record highs.
• US will reportedly keep tariffs on Chinese imports after election.
• US Dollar Index looks to close below 97.40.

The XAU/USD pair spiked to a fresh daily high of $1549 in the last hour amid a negative shift in the market sentiment but quickly erased its gains. As of writing, the troy ounce of the precious metal was trading at $1545.60, erasing 0.16% on a daily basis.

Safe-haven assets find demand in American session

Citing unnamed sources, Bloomberg reported that the United States could opt out to wait until after the 2020 presidential election before removing tariffs on Chinese imports to trigger fresh risk-off flows. After touching fresh all-time highs earlier in the day, the S&P 500 and the Nasdaq Composite both dropped into the negative territory to reflect the sour mood and the 10-year US Treasury bond yield extended its slide and was last down 1.7% on the day.

In the meantime, the falling T-bond yields seem to be weighing on the USD as well. The US Dollar Index, which tested the 97.50 mark earlier in the day, is now down 0.03% at 97.35. 

The only data from the US on Tuesday showed that the core Consumer Price Index (CPI) in December stayed unchanged at 2.3% on a yearly basis to match the market expectation and was largely ignored by the participants. 

Investors will be keeping a close eye on the details of the US-China phase-one trade deal that will be released before sides sign the deal on Wednesday in Washington.

Technical levels to watch for