Gold struggles to hold above $1,740, looks to post modest daily gains

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  • XAU/USD remains on track to close the day in the positive territory.
  • The risk-on market environment limits gold’s upside on Monday.
  • USD starts the new week on the back foot.

The XAU/USD pair started the week with a bullish gap and rose above $1,740 during the Asian trading hours before losing its traction. After dropping toward $1,730, however, the pair capitalized on the broad-based USD weakness during the American trading hours and now looks to close in the positive territory. As of writing, a troy ounce of gold was trading at $1,737, rising 0.45% on the day. 

USD continues to lose interest

Monday’s macroeconomic data releases from the United States showed that the business activity in the manufacturing sector continued to decline in May. However, both the ISM and the Markit Manufacturing PMI rebounded from April levels to show that the pace of contraction was softer.

Reflecting the risk-on environment, Wall Street’s main indexes are posting modest daily gains on Monday and the greenback is having a tough time finding demand. The US Dollar Index, which spent the first half of the day above 98, was last down 0.43% on the day at 97.87.

Meanwhile, the precious metal is also finding it hard to preserve its strength as investors stay away from safe-haven assets.

There won’t be any significant macroeconomic data releases during the Asian session that could impact the risk sentiment and the USD’s valuation is likely to drive the pair’s movements.

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