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  • Gold struggles to extend last week’s recovery moves.
  • Covid, Sino-Western tensions and upbeat US strength test gold buyers.
  • After the Good Friday holiday, most markets in Asia are off due to Easter Monday.
  • Lackluster trading expected ahead of the US session, risk catalysts remain as the key.

Gold looks to reverse the week-start drop to $1,726.31 while taking rounds to $1,728-29 during the early Monday morning in Asia. However, off in most Asian markets and a lack of major risk catalysts seem to test the gold traders off-late even as US dollar strength seems to test the bullion’s recovery moves, portrayed the last week.

US dollar weighs on recovery moves”¦

US dollar index (DXY) pulled back from November 2020 tops and favored gold traders to trim losses the last week. However, Friday’s upbeat US employment figures join strong US Treasury yields to weigh on the yellow metal.

US jobs report for March managed to beat the market expectations as the headline Nonfarm Payrolls (NFP) rose to 916K. Not only strong employment figures but President Joe Biden’s $2.25 trillion infrastructure spending also suggests faster recovery of the world’s largest economy, which in turn directs market players toward the greenback.

Also on the positive side could be the US 10-year Treasury demand which takes clues from reflation fears amid a global wave of fiscal and monetary stimulus to overcome the pandemic.

It’s worth mentioning that the recent positive covid vaccine news and faster jabbing in the key developed economies also favor the US bond bears and back the US dollar off-late.

Meanwhile, the coronavirus (COVID-19) resurgence and Western tussle with China are also the key challenges to the market sentiment that should weigh on the yellow metal.

Against this backdrop, S&P 500 Futures struggle for a clear direction after Friday’s upbeat performance.

Looking forward, off in Australia, New Zealand and China may restrict market moves in Asia. Though, recent challenges to risk, mainly emanating from France and concerning US President Biden’s infrastructure spending plan, may entertain the commodity traders.

Technical analysis

Despite crossing a downward sloping trend line from January 29, gold needs to provide a daily closing beyond 21-day EMA, around $1,730 by the press time, to recall buyers. Otherwise, the risk of the precious metal’s pullback to $1,676 can’t be ruled out.