- Gold gains some positive traction and recovers some of Friday’s slide to multi-month lows.
- The pullback in US bond yields is weighing on the USD and offers some support for the yellow metal.
- Market optimism could limit any significant gains for the safe-haven XAU / USD.
The oro has moved higher during the European session on Monday, holding on to recovery gains around the $ 1,750 level.
Gold has managed to regain positive traction on the first day of a new trading week and now has recovered part of Friday’s drop to eight-month lows. The rally has been supported for a softer tone around the US dollar, which tends to benefit gold prices, denominated in dollars. The retreat of the US Treasury yields have kept USD bulls on the defensive and it has offered some additional support to the yellow metal.
It is worth remembering that the yield on the 10-year US government bond soared to the highest level in a year amid expectations of a strong economic recovery. Reflation trading has also forced investors to weigh the possibility of a pick-up in inflation, raising doubts that the Fed would keep rates ultra-low for a longer period and dragged the XAU / USD to its lowest level since June 2020 on Friday.
Meanwhile, the impressive rate of vaccination for COVID-19 and the progress on a massive US tax spending plan have further boosted investor sentiment. In fact, the House of Representatives on Saturday approved the $ 1.9 trillion pandemic aid package proposed by US President Joe Biden. This, in turn, has led to new momentum in the stock markets, which could curb any further gains for the XAU / USD safe haven.
This makes it prudent to wait for a sustained move beyond the $ 1,760-65 region before confirming that gold prices have bottomed out in the near term and positioning for any further bullish movement. Market participants are now looking forward to the release of the US ISM Manufacturing PMI for a short-term trade boost.
Technical levels of gold
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
