- USD weakness remains the main market theme on Monday.
- Heightened tensions in the Middle East weigh on the sentiment.
- Gold remains on track to end 2019 above $1500.
The XAU/USD pair gained more than $30 last week supported by the broad-based USD weakness and closed at $1511. With the poor performance of major Asian equity indexes and heightened geopolitical tensions in the Middle East, the pair stretched higher at the start of the week and renewed its best level in more than two months at $1515.90 before going into a consolidation phase. As of writing, the pair was up only 0.08% on the day at $1511.75.
Reports revealing US airstrikes against the Iranian-backed Kataib Hezbollah militia in Syria and Iraq over the weekend caused geopolitical tensions to escalate on Monday. According to Iranian state news agency IRNA, “US military aggression against Iraqi soil and Iraqi forces is strongly condemned as a clear example of terrorism,” Iranian Foreign Ministry spokesman Abbas Mousavi said.
Persistent USD weakness heading into 2020
In the meantime, the year-end capital flows and investors’ position adjustment continue to weigh on the greenback and help the pair stay in the positive territory. Ahead of Goods Trade Balance and Pending Home Sales data from the US, the US Dollar Index is down 0.2% on the day at 96.82.
Markets’ risk perception and the USD’ performance are likely to continue to drive the pair’s action before investors take a one day break on Wednesday.
Technical levels to watch for
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