Gold Price Analysis: XAU/USD struggles near weekly lows, bears await a break below $1720

Gold witnessed some selling during the mid-European session and was last seen hovering near the lower boundary of its weekly trading range, just above the $1720 region.

The precious metal has been struggling to gain any meaningful traction and has been oscillating in a narrow trading band since the beginning of this year. Investors remain worried that the third wave of COVID-19 infections and pandemic-related restrictions could derail the global economic recovery. This, in turn, was seen as a key factor that extended some support to the safe-haven XAU/USD.

That said, a generally positive tone around the equity markets failed to impress bullish traders or provide any impetus to the precious metal. Apart from this, a goodish pickup in the US Treasury bond yields further collaborated to cap gains for the non-yielding yellow metal. This, along with the underlying US dollar bullish sentiment, supports prospects for some meaningful downside.

The greenback remained well supported by the upbeat US economic outlook, bolstered by the passage of a massive stimulus package and the impressive pace of coronavirus vaccinations. Thursday's stronger US macro data reinforced the narrative of a relatively faster US economic recovery. Adding to the optimism, US President Joe Biden pledged to administer 200 million vaccine shots in 100 days.

The fundamental backdrop remains tilted firmly in favour of bearish traders. However, it will be prudent to wait for a sustained break below a two-week-old trading range support, around the $1720 region before positioning for a further depreciating move. Nevertheless, the XAU/USD remains vulnerable to slide below the $1700 mark and retest multi-month lows, around the $1677-76 region.

Market participants now look forward to the US economic docket, featuring the releases of Personal Income/Spending figures for February, Core PCE Price Index and Michigan Consumer Sentiment index. The data could provide further hints about the US economic strength. Apart from this, the US bond yields, might influence the USD and produce some meaningful trading opportunities around the XAU/USD.

Technical levels to watch