Gold Price Analysis: XAU/USD retreats from two-month tops, slides to $1,770 region

• Gold struggled to capitalize on its intraday positive move to near two-month tops.
• A goodish pickup in the US bond yields prompted some selling around the metal.
• Sustained USD selling should help limit any deeper losses amid a softer risk tone.

Gold witnessed an intraday turnaround from two-month tops and refreshed daily lows, around the $1,770 region heading into the North American session.

The precious metal prolonged its recent strong positive move from the $1,677-76 region, or multi-month lows and gained some follow-through traction on the first day of a new trading week. The prevalent selling bias surrounding the US dollar was seen as a key factor that benefitted the dollar-denominated commodity.

Despite the incoming positive US economic data, investors seem convinced that the Fed will keep rates low for a longer period. Reduced bets for an earlier than anticipated Fed lift-off, along with expectations that any spike in inflation is likely to be transitory, dragged the key USD Index to over one-month lows.

Meanwhile, renewed fears about another dangerous wave of coronavirus infections globally took its toll on the global risk sentiment. This was seen as another factor that provided an additional lift to the safe-haven XAU/USD. That said, a modest pickup in the US Treasury bond yields capped gains for the non-yielding yellow metal.

From a technical perspective, last week’s sustained move beyond the $1,760-65 region reaffirmed a bearish double-bottom formation on the daily chart. Hence, any meaningful slide back towards the mentioned resistance breakpoint should be seen as a buying opportunity, which should help limit the downside for the XAU/USD.

There isn’t any major market-moving economic data due for release from the US. Hence, the US bond yields will play a key role in influencing the XAU/USD. Apart from this, the USD price dynamics and the broader market risk sentiment might further contribute to produce some short-term opportunities around the commodity.

Technical levels to watch