Gold Price Analysis: XAU/USD retreats further from two-week tops, slides below $1850 level
- A modest pickup in the USD demand prompted some selling around gold on Friday.
- A pullback in the equity markets, sliding US bond yields might help limit the losses.
Gold lost some additional ground during the mid-European session and dropped to two-day lows, around the $1845 region in the last hour.
The precious metal witnessed some selling on the last trading day of the week and moved further away from two-week tops, around the $1875 region set in the previous session. The pullback could be solely attributed to a modest pickup in the US dollar, which tends to undermine demand for the dollar-denominated commodity.
The XAU/USD, for now, seems to have stalled this week's solid bounce from the vicinity of the $1800 mark, or eight-week lows touched on Monday. That said, a slight deterioration in the global risk sentiment – as depicted by a turnaround in the equity markets – might extend some support to the safe-haven commodity.
The imposition of a partial lockdown in Beijing resurfaced concerns about the potential economic fallout from the coronavirus pandemic and weighed on investors sentiment. The flight to safety was evident from sliding US Treasury bond yields, which could further help limit the downside for the non-yielding yellow metal.
This, in turn, warrants some caution for bearish traders and makes it prudent to wait for some strong follow-through selling before positioning for any further near-term depreciating move. Nevertheless, the XAU/USD still seems poised to end the week with gains of around 1.2% and snap two consecutive weeks of the losing streak.
Market participants now look forward to the release of the flash US PMI prints for a fresh impetus. Apart from this, developments surrounding the coronavirus saga will influence the broader market risk sentiment and play a key role in influencing the XAU/USD.
Technical levels to watch