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  • The USD fails to capitalize on Friday’s late rebound and helped regain traction.
  • The prevalent risk-on mood/surging US bond yields might cap any strong gains.
  • A sustained break below $1500 is needed for a near-term bearish confirmation.

Gold traded with a mild positive bias through the mid-European session on Monday and is currently placed at the top end of its daily trading range, just above $1510 level.
Spot prices continued showing some resilience near the key $1500 psychological mark and reversed an early dip back closer to Friday’s two-week lows, touched in reaction to the Fed Chair Jerome Powell’s upbeat comments on the US economy.
It is worth recalling that the precious metal on Friday initially climbed to the $1528 region following the release of softer headline NFP print for August but started losing steam after Powell dismissed fears of an imminent recession in the US.

Subdued USD remain supportive/risk-on mood to cap gains

The US Dollar, however, failed to capitalize on the previous session’s late rebound and remained on the defensive at the start of the new trading week, which seemed to be the only factor lending some support to the dollar-denominated commodity – Gold.
This coupled with firming expectations that the Fed will eventually cut interest rates at September meeting further collaborated towards driving flows towards the non-yielding yellow metal, albeit the prevalent risk-on mood might cap further gains.
The recent optimism over the resumption of the US-China trade talks in early October remained supportive of improving global risk sentiment, which tends to dent demand for traditional safe-haven assets and should keep a lid on any runaway rally for Gold.
In absence of any major market-moving economic releases from the US, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the commodity’s move through Monday’s trading session.
Even from a technical perspective, last week’s slide below 100-hour SMA already seems to have set the stage for an extension of the recent corrective slide from multi-year tops and warrant caution before placing any aggressive bullish bets.
Hence, it will be prudent to wait for a strong follow-through buying beyond Friday’s swing high before traders again start positioning for the resumption of the precious metal Gold’s recent bullish trajectory that started from sub-1300 level touched in late-May.

Technical levels to watch