- A combination of factors triggers new sales around gold on Monday.
- Market optimism and rising US bond yields put pressure on the precious metal.
- The sustained sale of USD could offer some support and help limit any further decline.
The oro remains on the defensive during the first half of the European session, trading near the lower limit of its daily range, around the region of $ 1,818-17.
The precious metal was unable to capitalize on Friday’s intraday rebound from the $ 1,810 area, and found new sales on the first day of a new week. The drop is due to a combination of factors, although it has lacked solid continuation amid a sustained selling bias around the US dollar.
Progress in vaccines for the coronavirus and hopes for a massive US fiscal spending plan. they have continued to support underlying bullish sentiment in financial markets. This has turned out to be one of the key factors weigh on the safe haven XAU / USD.
Meanwhile, the firm expectations of the approval of the stimulus package for COVID-19 of 1.9 trillion dollars proposed by the president of the United States, Joe Biden, have pushed the benchmark 10-year government bond yield to the highest level since February 2020, which has continued to push money flows away from the yellow metal.
That said, the USD seems rather unimpressed by the current surge in U.S. bond yields and has remained on the defensive. This, in turn, has been seen as the only factor that could prevent investors from opening new aggressive bearish positions and could help limit the fall in the price of gold, denominated in dollars.
Therefore, it will be prudent to wait for some selling below Friday’s lows and a subsequent breakout of the $ 1,800 level before positioning for any further bearish movement. This would set the stage for an eventual dip below the support of the monthly lows near the $ 1,785 region.
In the absence of major US economic releases, broader market risk sentiment will continue to play a key role in influencing the XAU / USD. Aside from this, US bond yields and US dollar price dynamics could also generate some short-term trading opportunities.
Technical levels of gold
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