- Gold moves higher on Monday amid a modest pullback in US Treasury yields.
- Risk appetite sentiment and a rally in the USD limit any significant gains for the yellow metal.
The oro it moves with a slight positive bias during the first half of the European session on Monday, staying close to the $ 1,730 region and rising around 0.35% on the day.
The precious metal has built on the good bounce of the previous day, from levels just below $ 1,700, and has gained some traction on the first day of the week. This is marking the second consecutive day of positive movement and is exclusively due to a modest decline in US Treasury yields, which tends to drive monetary flows toward the non-performing yellow metal.
Investors are still optimistic about the US economic outlook amidst the impressive rate of vaccination for COVID-19. This, coupled with the passage of a massive stimulus package has been boosting reflation trading and has forced investors to start pricing in a possible spike in US inflation. This, in turn, pushed the yield on the 10-year US government bond to one-year highs on Friday.
Nevertheless, expectations that the Fed could take some action to stem the sharp rise in the cost of long-term borrowing they have provided respite for bond traders. Therefore, the rally could only be attributed to some short hedging ahead of the FOMC’s monetary policy meeting this week. That said, a combination of factors has prevented the bulls from opening aggressive positions and limited strong gains for the XAU / USD.
Prospects for a faster US economic recovery from the pandemic have continued to prop up the US dollar., which could weigh on gold prices, denominated in dollars. Aside from this, the underlying bullish sentiment in financial markets, as shown by the optimistic tone around equity markets, could further limit the rise of the XAU / USD as a safe haven, at least for the time being.
Market participants are now waiting for the US economic calendar, which features the only Empire State Manufacturing Index release, to gain some momentum later at the start of the US session. Investors will follow the indications of general market risk sentiment, US bond yields, and USD price dynamics to seize some near-term opportunities.
Gold technical levels
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