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  • A strong pickup in the USD demand prompted some selling around gold on Monday.
  • A pullback in the equity markets, sliding US bond yields helped limit deeper losses.

Gold witnessed some selling during the early European session and dropped to three-day lows in the last hour, albeit quickly recovered a bit thereafter. The commodity was last seen trading just above the $1830 level, down around 0.30% for the day.

The precious metal edged lower for the second consecutive session on Friday and retreated further from two-week tops, around the $1848 region touched in reaction to the disappointing headline US NFP print. The follow-through selling was exclusively sponsored by a strong pickup in the US dollar demand, which tends to undermine the dollar-denominated commodity.

However, a modest pullback in the equity markets helped limit deeper losses for the safe-haven XAU/USD. The global risk sentiment took a hit on the first day of a new trading week on reports that the US was preparing sanctions on at least a dozen Chinese officials over their alleged role in the disqualification of elected opposition legislators in Hong Kong.

Adding to this, expectations that the US lawmakers will agree on a new coronavirus relief package and sliding US Treasury bond yields extended some additional support to the non-yielding yellow metal. This makes it prudent to wait for some follow-through selling before confirming that the recent bounce from multi-month lows has already run out of the steam.

There isn’t any major market-moving economic data due for release from the US on Monday, leaving the XAU/USD at the mercy of the USD price dynamics. Apart from this, the broader market risk sentiment will also play a key role in influencing the commodity and assist investors to grab some short-term trading opportunities.

Technical levels to watch