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Gold rally has stalled

Gold rally has stalled

After a three-day rally, gold prices turned negative on Thursday as risk-on sentiment has improved on positive developments globally.

The bullion jumped to the $1,310 area yesterday but failed to preserve the bullish momentum and retreated, testing the key $1,300 handle again.

On Wednesday, the U.S. Treasury Secretary Steven Mnuchin said the US and China have agreed on a mechanism to police any trade agreement they reach. Which fueled investor optimism over trade.

Also, investors are cheering news from the UK. In particular, the EU leaders and the U.K. agreed to a flexible extension of the Brexit deadline until Oct. 31. Besides, the dollar feels somehow uncomfortable these days, and the bullion derives additional support from this factor.

Technically, gold needs to keep above the $1,300 psychological handle in order to avoid a more aggressive profit-taking in the short term. Once below the $1,280 region, the selling pressure will increase. On the upside, the $1,310 level remains in focus.