Gold Price Analysis: XAU/USD flirts with multi-month lows, below $1690 level
|- A combination of factors prompted some fresh selling around gold on Monday.
- Rising US bond yields continued underpinning the USD and exerted some pressure.
- A softer risk tone might help limit any further losses for the safe-haven XAU/USD.
Gold maintained its offered tone through the mid-European session and was last seen hovering near the lower boundary of its daily trading range, just below the $1690 level.
The precious metal failed to capitalize on its early uptick, instead met with some fresh supply near the $1714 region and has now drifted back closer to nine-month lows touched on Friday. The US dollar kicked off the new week on a strong footing and shot to three-month tops in reaction to the passage of a massive US fiscal stimulus bill. This, in turn, was seen as a key factor that kept a lid on the early uptick, rather prompted some fresh selling around the dollar-denominated commodity.
The US Senate on Saturday voted 50-49 in favour of US President Joe Biden's $1.9 trillion pandemic relief package and triggered another sell-off in the US fixed income market. This, along with concerns about higher inflation, pushed the yield on the benchmark 10-year US government bond closer to 1.60%, or over one-year tops touched in the aftermath of stunning NFP report on Friday. This was seen as another factor underpinning the USD and driving flows away from the non-yielding yellow metal.
Meanwhile, the bond market rout raised fears of distressed selling in other asset classes. Apart from this, reports of attacks on Saudi Arabian oil facilities weighed on investors' sentiment. This was evident from a softer tone around the equity markets, which extended some support to the traditional safe-haven XAU/USD and might help limit deeper losses, making it prudent to wait for some follow-through selling before positioning for an extension of the recent/well-established bearish trend.
There isn't any major market-moving economic data due for release from the US on Monday. Hence, the US bond yields will continue to play a key role in influencing the USD price dynamics. Traders might further take cues from the broader market risk sentiment for some short-term opportunities around the XAU/USD.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.