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  • Gold failed to capitalize on its early positive move to $1655 area.
  • Signs of stability in financial markets weighed on safe-haven assets.
  • A turnaround in the US bond yields exerted some additional pressure.

Gold surrendered its early modest gains and has now drifted into the negative territory, refreshing session lows around the $1634-335 region.

The precious metal failed to capitalize on the intraday positive move, rather met with some fresh supply near the $1655 region and was being weighed down by a combination of negative forces.

Despite growing concerns about the economic impact of the coronavirus outbreak, a modest recovery in the global risk sentiment weighed on the precious metal’s perceived safe-haven status.

This coupled with a turnaround in the US Treasury bond yields from all-time lows further collaborated towards exerting some additional downward pressure on the non-yielding yellow metal.

In fact, the yield on the benchmark 10-year bond was up around 3.0% for the day and helped revive the US dollar demand, which played its part in driving flows away from the dollar-denominated commodity.

It will now be interesting to see if the metal is able to attract any buying interest at lower levels or extends this week’s sharp retracement slide from the vicinity of $1700 mark, or multi-year tops set on Monday.

Technical levels to watch

Any subsequent fall is likely to find some support near the overnight swing lows, around the $1625 region, below which the commodity is likely to accelerate the fall further towards the $1600 round-figure mark. On the flip side, the $1650 region now seems to have emerged as an immediate resistance, which if cleared might negate prospects for any further corrective slide.