Gold Price Analysis: XAU/USD trades with modest losses around $1850 region
|- Gold remained depressed for the third consecutive session on Monday.
- The upbeat market mood was seen as a key factor exerting some pressure.
- A weaker USD extended some support to the metal and helped limit losses.
Gold traded with a mild negative bias through the early European session and was last seen hovering near daily lows, around the $1850 region.
The precious metal struggled to capitalize on the previous session's bounce from the $1837 region, instead witnessed some selling on the first day of a new trading week. The downtick marked the third consecutive day of a negative move and was sponsored by the underlying bullish sentiment, which tends to undermine demand for the safe-haven XAU/USD.
Despite growing market worries about the potential economic fallout from the ever-increasing COVID-19 cases, hopes for US financial aid remained supportive of the upbeat market mood. It is worth recalling that investors have been pricing in the prospects for a $1.9 trillion fiscal stimulus plan to help revive the US economy under Joe Biden's presidency.
Meanwhile, the likelihood of more aggressive fiscal spending in 2021, coupled with the risk-on flow pushed the US Treasury bond yields higher. This was seen as another factor weighing on the non-yielding yellow metal. That said, a weaker US dollar extended some support to the dollar-denominated commodity and helped limit deeper losses, at least for now.
In the absence of any major market-moving economic releases from the US, the broader market risk sentiment might continue to play a dominant role in influencing the XAU/USD. This makes it prudent to wait for some follow-through selling before confirming that the recent bounce from the vicinity of the $1800 mark might have already run out of the steam.
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.