Gold Price Analysis: XAU/USD bounces off 100-DMA support, climbs to $1866 level

Gold reversed an early European session dip back closer to two-month tops and was last seen trading near the top end of its daily trading range, around the $1865-66 region.

The commodity once again managed to find decent support near 100-day SMA, around the $1849 region, and staged a modest rebound on the first day of a new trading week. The US dollar witnessed aggressive long-unwinding trade, which, in turn, was seen as a key factor that benefitted the dollar-denominated commodity.

Investors remain concerned that the lack of any additional fiscal stimulus measures could halt the current US economic recovery. Adding to this, the political uncertainty in the run-up to the US Presidential election further prompted traders to lighten their USD bullish bets and provided a minor lift to the XAU/USD.

Hence, the key focus will remain on the first presidential debate, scheduled on Tuesday. This, along with the release of the US economic data later this week, including the closely watched monthly jobs report (NFP), will provide a fresh directional impetus.

Meanwhile, the upside is likely to remain capped amid a strong recovery in the global risk sentiment. The risk-on mood was evident from solid gains in the equity markets, which could undermine the precious metal's safe-haven demand. The risk-on mood-led pickup in the US Treasury bond yields might further collaborate to keep a lid on any additional gains for the non-yielding yellow metal.

There isn't any major market-moving economic data due for release from the US on Monday. Hence, it will be prudent to wait for some strong follow-through buying before confirming that the XAU/USD might have already bottomed out in the near-term and positioning for any further near-term appreciating move.

Technical levels to watch