- Gold remains under some selling pressure on the last trading day of the week.
- A broad-based USD strength weighs on dollar-denominated gold prices.
- Risk-off sentiment does little to impress the bulls or offer support for the XAU / USD.
The oro has moved lower during the Asian session on Friday and has fallen to fresh eight-month lows, around the $ 1,756 level. At time of writing, the XAU / USD is recovering slightly towards the $ 1,765 region, still negative on the day.
The precious metal has extended the heavy losses of the previous day and has been witness some subsequent sales for the second day in a row on Friday. The fall the day before was motivated by a sudden spike in Treasury yields from the United States, which tends to push money flows away from the yellow metal.
The impressive rate of vaccination against COVID-19 and progress on the stimulus package of 1.9 trillion dollars proposed by the president of the United States, Joe Biden, has fueled hopes of a strong global economic recovery. Reflation trading, coupled with rising inflation expectations, have continued to drive returns of US bonds on the rise.
In fact, the benchmark 10-year US government bond yield has risen above 1.50%, a high of more than a year. This, in turn, has provided a strong boost to the US dollar, which has gained traction on the last trading day of the week and has put additional pressure on dollar-denominated gold prices.
In the meantime, a new global wave of risk aversion, as shown by a sharp pullback in equity markets, it has done little to impress the bulls or offer support to the safe-haven XAU / USD. The lack of buying interest favors the bears and supports the prospects for further weakness.
Even from a technical perspective, a break below the $ 1,964-60 support zone adds credibility to the bearish outlook. Therefore, a subsequent drop towards the test of the $ 1,750 support zone, en route to the $ 1,725-24 region and the round $ 1,700 level, now seems like a clear possibility.
Market participants are now awaiting the US economic calendar, which features the release of the underlying PCE price index, the goods trade balance, and the Chicago PMI. This, along with US bond yields, will influence the USD. Apart from this, the broader market risk sentiment could generate some trading opportunities around the XAU / USD.
Gold technical levels
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