Gold Price Analysis – XAU/USD flirts with session lows, around $1725 region
- A modest pickup in the USD demand prompted fresh selling around gold on Monday.
- A softer risk tone extended support to the safe-haven XAU/USD and helped limit losses.
- Sustained weakness below the $1720 support is needed to confirm a bearish breakdown.
Gold remained depressed through the early European session and was last seen flirting with daily lows, around the $1725 region.
The precious metal witnessed some fresh selling on the first day of a new trading week and erased the previous session’s modest recovery gains from the $1720 support area. The US dollar stood tall near four-month tops, which, in turn, was seen as a key factor exerting pressure on the dollar-denominated commodity.
Investors remained optimistic about the outlook for the US economy amid the impressive pace of coronavirus vaccinations and the passage of a massive stimulus package. Further supporting the prospects for a relatively faster US economic recovery were hopes for an additional $3.0 trillion infrastructure spending plan.
That said, a weaker tone around the US equity futures assisted the safe-haven XAU/USD to hold its neck above the lower boundary of strong horizontal support near the $1720 region. This makes it prudent to wait for a sustained break through the mentioned level before positioning for any further depreciating move.
There isn’t any major market-moving US economic data due for release on Monday. Hence, the USD price dynamics will continue to play a key role in influencing the XAU/USD. This, along with the broader market risk sentiment, might provide some impetus and allow traders to grab some short-term opportunities.
Technical levels to watch