Gold consolidates gains, heads for the highest close in two weeks

• XAU/USD extends gains as US Dollar turns negative and US yields move lower. 
• The metal rises $10 over the day, could post strongest daily close since May 15. 

The decline of the US Dollar during the American session and the move toward daily lows in the US yields favored another leg higher in gold prices. The yellow metal climbed to $1,289.50/oz, reaching a 2-week high. 

As of writing trades at $1,287 up 0.50% for the day, about to post a daily close clearly above last week highs, supporting the bullish bias from a technical perspective. 

The greenback was already lower against Emerging market currencies and more recently lost strength versus majors. The DXY that spend most of the day in positive territory, is now down 0.02%, at 98.12. The latest headlines regarding the Federal Reserve were not supportive of the greenback. The Vice Chairman of the Fed, Richard Clarida, considers that downside risk could call for more accommodative policy and mentioned inflation data has come lower than expected. 

The recovery seen in gold today, pushed the price away from the bottom it set in lat in April and early in May at $1266. If it continues to rise it could test the resistance area around $1291. 

Commenting on recent moves, analysts at TDS, point out that while volatility has remained unusually low, gold has once again started to catch the market's attention. “Global growth worries suggest that appetite for diversifiers is growing, which could put a shine on gold. Indeed, this along with low inflation has prompted investors to gobble up US Treasuries, driving yields lower and increasingly pricing a Fed cut. While they are adjusting asset allocations in response to rising equity volatility, gold positioning remains uncharacteristically low, particularly for the late stage of the cycle, when tail risks tend to escalate.”