- Gold attracted some dip-buying near the $1808 region on the first day of a new week.
- A combination of factors might keep a lid on any meaningful upside for the commodity.
Gold reversed an early dip to the $1808 region and moved to the top end of its daily trading range during the early European session. The commodity was last seen trading near the $1817 area, up around 0.20% for the day.
The precious metal attracted some dip-buying on the first day of a new trading week and might now be looking to build on Friday’s goodish recovery move from over two-month lows. The uptick lacked any obvious fundamental catalyst and is likely to remain capped amid the prevalent upbeat market mood, which tends to undermine demand for the safe-haven XAU/USD.
Progress in coronavirus vaccinations continued fueling hopes for a strong global economic recovery. This, along with the increasing likelihood for a massive US fiscal stimulus plan, further boosted investors’ confidence and remained supportive of the ongoing rally in the equity markets. This, in turn, might hold bullish traders from placing aggressive bets.
Meanwhile, expectations for a larger government borrowing to fund the stimulus pushed the yield on the benchmark 10-year US government bond to near one-year tops. The continuous surge in the US Treasury bond yields helped revive the US dollar demand. This might turn out to be another factor capping any meaningful upside for the non-yielding yellow metal, at least for now.
There isn’t any major market-moving economic data due for release from the US on Monday. This further makes it prudent to wait for some strong follow-through buying before confirming that the XAU/USD has bottomed out in the near-term and positioning for any further appreciating move. In the meantime, the broader market risk sentiment will continue to influence the metal.
Apart from this, the US bond yields and the USD price dynamics will also contribute to produce some meaningful trading opportunities around the dollar-denominated commodity.
Technical levels to watch
Share
