- Gold draws in some lower buying on Monday and halts its recent corrective pullback.
- The new nervousness around COVID-19 supports the safe-haven precious metal amid persistent inflation fears.
- Optimistic expectations from the Fed, high US bond yields and a strengthening dollar could limit gains.
The Gold has rebounded from a dip in the Asian session to nearly two-week lows And, at the time of writing, the XAU / USD is trading at the upper end of its daily range, just below the $ 1,850 level. The worsening of the COVID-19 situation in Europe It has turned out to be a key factor that has benefited traditional safe haven assets and helped the XAU / USD attract some buying on the first day of a new week. Austria said it would be the first Western European country to reimpose a complete lockdown to cope with rising infections, while Germany He warned that he could follow suit. Aside from this, lingering concerns about rising consumer prices further underpinned the precious metal’s appeal as a hedge against inflation.
Having said that, optimistic expectations from the Fed and a stronger US dollar they could limit additional gains to the price of gold. In fact, Fed fund futures indicate the possibility of an eventual Fed rate hike for July 2022 and a high probability of another hike for November. The speculation was further fueled by comments from Fed Governor Christopher Waller, saying that the US central bank should accelerate the pace of tightening to give more room for maneuver to raise interest rates. Prospects for an early tightening of monetary policies by the Fed they continued to act as a tailwind for US Treasury yields. This, coupled with the prevailing bullish sentiment around the US dollar, should prevent traders from opening aggressive bullish positions around dollar-denominated gold.
However, the XAU / USD, for now, appears to have halted its corrective pullback from a multi-month high set last week and has broken two consecutive days of losing streak. In the absence of any top-tier economic release from the United States, dollar price dynamics and US bond yields will continue to play a key role in influencing movements in the yellow metal. Investors will take more cues from developments around the coronavirus saga to seize some short-term opportunities around XAU / USD.
Gold technical perspectives
From a technical perspective, the price of gold has managed to find some support before the horizontal resistance break point of 1.834-32$. This region should now act as a key pivot point and help determine the next directional move. A sustained breakout of this level would trigger some technical selling and accelerate the decline towards the region of 1.808-07$ on the way to the level of 1.800$.
On the other hand, some continuation purchases beyond the level of 1.850$ could trigger a short hedging move and push gold towards the resistance zone of 1.865$. The next relevant obstacle is near the 1.875-77$ (multi-month highs), above which the XAU / USD could aim to regain the level of 1.900$ for the first time since June.
Daily chart gold
Gold levels to highlight
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