Gold struggles to extend gains above $1290

Eren Sengezer FXStreet

The precious metal is having a difficult time extending its gains against the greenback in the NA session on Monday with the XAU/USD pair trading at $1289, still up 0.4% on the day.

Wehn American traders hit their desks, the pair rose to its session high at $1293 as the market sentiment remained negative amid revived geopolitical tensions on the Korean peninsula. The demand for the traditional safe-havens like gold and U.S. Treasury-bonds remained high while the falling yields weighed on the greenback, providing an additional boost for the pair. As of writing, the DXY was trading at 93.02, losing 0.36% on the day.

However, the major equity indexes in the U.S. reversed course in the last couple of hours after starting the day substantially lower with the Dow Jones Industrial Average and the S&P 500 both turning flat at the moment. The recovery in stocks seems to have capped the gains in the pair.

In the short-term, the pair is likely to respond to the market sentiment as the economic calendar will be lacking any significant data that could potentially impact the price action in the remainder of the session and on Tuesday.

Technical levels to consider

$1300 continues to stay as the first critical resistance on the upside ahead of $1308 (Nov. 2, 2016, high) and $1320 (Oct. 3, 2016, high). On the flip side, supports could be seen at $1280 (daily low), $1274 (20-DMA) and $1260 (Aug. 3 low). The CCI indicator on the daily graph is inching closer to the 100 mark, suggesting that the bullish momentum is building up.

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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