Gold flirting with daily lows, near $1490 region
- Gold failed to capitalize on the early uptick to levels beyond the $1500 mark.
- A rush to hoard cash helped limit the USD pullback and exerted some pressure.
- A sustained break below $1450 support needed to confirm a bearish outlook.
Gold held on to its weaker tone through the early European session on Monday and is currently placed near the lower end of its daily trading range, below the $1490 region.
The precious metal gained some traction at the start of a new trading week and was being supported by a combination of factors, including an early tumble in Asian equity markets and a broad-based US dollar weakness.
Growing market fears over the economic fallout from the coronavirus pandemic, leading to a global recession continued weighing on investors' sentiment and provided a modest lift to traditional safe-haven assets – like gold.
The risk-off mood triggered a fresh leg down in the US Treasury bond yields, which coupled with the US Senate’s failure to pass the COVID-19 rescue package bill prompted some USD selling and benefitted the non-yielding yellow metal.
Meanwhile, the global rush to hoard cash amid concerns about tightening liquidity conditions helped limit the USD pullback and kept a lid on any further gains for the dollar-denominated commodity, rather exerted some fresh downward pressure.
The metal continued with its struggle to sustain/build on the momentum back above the very important 200-day SMA, or the key $1500 psychological mark, and the emergence of selling pressure at higher levels supports prospects for further declines.
A sustained break below YTD lows support near the $1450 horizontal zone will reaffirm the bearish outlook and set the stage for an extension of the recent sharp pullback from multi-year tops and a slide towards challenging the $1400 mark.
Technical levels to watch