Gold trades in tight range below $1,700 on Monday
- Risk-off flows help the precious metal find support on Monday.
- US Dollar Index clings to modest gains, looks to steady above 100.
- Chicago Fed's National Activity Index drops to -4.19 in March.
The troy ounce of the precious metal closed the previous week virtually unchanged near $1,684 after touching a fresh multi-year high of $1,747 and started the new week in a calm manner. Despite the fact that the risk-averse environment is helping gold find demand, the pair trades in a narrow channel amid broad-based USD strength. As of writing, the pair was registering small daily losses near $1,682.
USD starts new week on strong footing
In the second half of last week, the improved market sentiment on hopes of major economies reopening by slowly easing coronavirus-related restrictions caused the pair to turn south. However, the poor performance of major global equity indexes on Monday suggests that markets are, once again, turning risk-averse to allow the pair to find support.
On the other hand, the US Dollar Index is posting daily gains near the 100 handle in the early trading hours of the American session to suggest that the greenback is also capitalizing on the dismal mood.
Meanwhile, the Federal Reserve Bank of Chicago's National Activity Index slumped to -4.19 in March from 0.06 in February to show that the economic activity has already gone into contraction territory and further weighed on the sentiment. Wall Street's performance in the second half of the day could impact the pair's movement in the absence of significant macroeconomic data releases.
Technical levels to watch for
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.
