- Gold once again faced rejection near the 200 DMA.
- The boost in risk appetite and rising US bond yields acted as a headwind for the commodity.
- The appearance of some purchases in dollars contributed to the intraday selling trend.
The Prayed continued to struggle to break above the important 200-day SMA and witnessed some intraday selling near the $1,840 area on Monday. The intraday decline dragged the pair to the lower end of the daily trading range, around the $1,828 area, during the early American session and was fueled by a combination of factors.
Investors were bullish on the hope that inflation will approach its peak, bolstered by the recent sharp drop in commodity prices. This was reflected in a generally positive tone around equity markets, which acted as a headwind for safe-haven gold. The influx of risk appetite boosted US Treasury yields and helped limit gains in the yieldless yellow metal.
A nice rebound in US bond yields allowed the dollar to reverse modest intraday losses to hit a one-week low. The dollar received additional support from US durable goods orders, which unexpectedly rose 0.7% in May. Orders excluding transportation items also beat estimates and rose 0.7%. A stronger dollar put additional pressure on dollar-denominated gold.
However, the decline appears muted, at least for now, amid growing recession fears and expectations that some G7 countries plan to ban bullion imports from Russia. This could restrict supply and continue to support gold prices. As such, it is prudent to wait for a strong sell-off before positioning yourself for another short-term downside move.
However, gold has filled a weekly bullish gap and repeated failures near a technically significant moving average suggest an eventual breakout to the downside. Therefore, any recovery attempt could be seen as a selling opportunity and risks fading quickly near the $1,848-$1,850 region, which should act as a key point for gold prices.
Technical levels
Source: Fx Street
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