- Gold regains positive traction on Monday amid falling US bond yields and dollar weakness.
- The boost in risk appetite coupled with hawkish expectations from the Fed should cap gains.
- The market’s focus will continue to be on Wednesday’s US consumer inflation data.
Gold manages to attract new purchases on Monday and maintains its constant intraday rise during the beginning of the American session. The XAU/USD hits a new daily high around the $1,786-$1,787 area in the last hour and has reversed much of Friday’s post-NFP losses.
The US dollar is under renewed selling pressure on the first day of a new week and is proving to be a key factor supporting dollar-denominated gold. The market’s reaction to the US monthly jobs data released on Friday is fading rather quickly amid a new leg lower for US Treasury yields. In fact, the yield on the 10-year US Treasury note falls below 2.80% again, keeping dollar bulls on the defensive and appearing to further benefit the underperforming yellow metal.
That said, a combination of factors could be holding bulls back from placing new bets on gold and limiting further gains. The risk appetite boost could act as a headwind for haven XAU/USD amid speculation that the Fed will maintain its aggressive tightening policy. The bets were boosted by the successful data from the US employment statistics, which showed that the economy added 528,000 jobs in July. In addition, higher-than-expected wage growth data suggest a further rise in inflationary pressures.
Therefore, the market’s attention is now focused on the latest US consumer inflation figures, due for release on Wednesday. The data will influence Fed rate hike expectations and will play a key role in boosting short-term dollar demand, which, in turn, should help determine the next leg of a directional move. for gold. Meanwhile, US bond yields, dollar price dynamics and broader risk sentiment will look for a boost amid the absence of relevant economic releases for the US market.
Technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
