Gold steadies near multi-month highs above $1325

The precious metal builds on last week's gains.
US Dollar Index extends slide on Monday.
Trading volume thins out in the NA session.

Eren Sengezer FXStreet

After closing the previous week $8 higher, the troy ounce of the precious metal started the week on a strong note and recorded steady gains to touch its highest level since April at $1327.50. However, the President's Day holiday in the U.S. weighed on the trading volume in the last hours and caused the XAU/USD pair to go enter a consolidation stage. As of writing, the pair was up 0.35% on the day at $1236.

Although the market sentiment seems to have improved amid rising hopes for this week's talks in Washington to lead to a final trade deal following President Trump's optimistic tweet over the weekend, the safe-haven gold didn't have a difficult time finding demand. The economic hardship the euro area is facing and the uncertainty surrounding Brexit negotiations are two of the main reasons why investors are still looking for a safer alternative.

Additionally, the broad-based selling pressure surrounding the greenback provided an additional boost to the pair. The US Dollar Index, which posted losses on Thursday and Friday last week, opened with a bearish gap and struggled to make a meaningful recovery in the absence of fundamental triggers. At the moment, the DXY is down 0.15% on a daily basis at 96.80.

Key technical levels

The initial resistance for the pair aligns at $1327.5 (daily high) ahead of $1332 (Apr. 25, 2018, high) and $1338 (Apr. 9, 2018, high). On the downside, supports could be seen at $1320 (daily low), $1313 (20-DMA) and $1300 (psychological level). Meanwhile, today's upsurge lifted the CCI indicator on the daily chart above the 100 level, suggesting that buyers are in control of the price action.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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