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  • Gold extends recovery for the third straight day.
  • Greenback stays quiet on Monday.
  • European equity indices push higher.

The XAU/USD pair, which reversed its course after dropping to a 20-month low near $1160 on Wednesday, started the new week on a positive note and advanced to a 5-day high at $1190. However, the pair failed to extend higher and started to retrace its daily gains. At the moment, the pair is trading at $1186, adding a little over $1 on the day.

Although concerns surrounding the EM currencies start to resurface as the TRY continues to weaken on Monday, major European indices are recording strong gains with Germany’s DAX and the UK’s FTSE adding 1.1% and 0.4% respectively. If Wall Street opens the day higher and stays in the positive territory, the precious metal could have a hard time finding demand during the NA session.

In the meantime, the US Dollar Index is moving sideways in a tight range as the empty macroeconomic calendar doesn’t offer any catalysts. As of writing, the index was up 0.07% on the day at 96.20.

On Wednesday, the FOMC is going to publish the minutes of its last meeting and until then the US dollar is unlikely to make a sharp move in either direction. In the second half of the week, investors will turn their attention to the Jackson Hole symposium.

Technical levels to consider

With a daily close above $1200 (psychological level), the pair could extend its recovery toward $1206 (20-DMA) and $1216 (Aug. 7 high). On the downside, supports are located at $1182 (daily low), $1172 (Aug. 17 low) and $1160 (Aug. 16 low).