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  • Gold edged lower on Monday amid a mildly positive tone around the equity markets.
  • The USD managed to preserve its gains and further contributed to the weaker tone.
  • Worsening US-China relations might lend some support and help limit deeper losses.
  • A sustained break below $1722 support needed to confirm any intraday bearish bias.

Gold met with some fresh supply on Monday, albeit lacked any strong follow-through selling and was last seen trading with only modest losses, just below $1730 level.

The commodity struggled to preserve its gains from the previous session, instead met with some fresh supply on the first day of a new trading week. A positive mood around the global equity markets was seen undermining the precious metal’s safe-haven demand.

Adding to this, the US dollar held steady with modest gains and exerted some additional downward pressure on the dollar-denominated commodity. However, concerns over worsening US-China relations helped limit deeper losses, at least for the time being.

Diplomatic tensions between the world’s two largest economies escalated further on reports that China is planning to impose national security laws in Hong Kong. The US President Donald Trump was quick to respond and threatened a strong reaction if the law is passed.

This comes on the back of the recent development, where in the US Senate passed a bill that could block some Chinese companies from selling shares on the American stock exchanges. This, in turn, fueled worries about a major US-China tussle.

Given that the US banks will be closed on Monday in observance of Memorial Day, relatively thin liquidity conditions might hold investors from placing any aggressive bets and continue lending some support to the yellow metal.

Even from a technical perspective, the commodity, so far, has managed to defend the $1722 horizontal support. This should act as a key pivotal point for intraday traders amid absent relevant market moving economic releases from the US.

Technical levels to watch