Gold Prices Hang Near Two-Week Low, Could Fall Further

Highlights:

The gold price is currently near the post-NFP low after meeting with a fresh supply on Monday.

The risk tone may be softer to help limit downside pressure ahead of the US inflation report on Thursday.

The XAU/USD continues to be weighed down by the diminishing expectations for more aggressive monetary easing by the Fed.

The XAU/USD is trading lower during the early European session on Monday, extending its decline from last week’s high. The metal is also close to a two-week trough, which was reached after the US employment data on Friday.

The US non-farm payrolls report released on Friday showed that the country’s labor market is still resilient. It also caused investors to reduce their expectations for the Fed to ease monetary policy further.

This supports the case for higher US Treasury yields, which makes the dollar more attractive and leads to outflows from the yellow metal.

This supports the case for higher US Treasury yields, which makes the dollar more attractive and leads to outflows from the yellow metal.

Despite the upbeat data, the markets still expect the Fed to start reducing its monetary stimulus at its next meeting in March.

The dollar’s retreat from recent highs can also support the gold price. It curbs the aggressive bets made by the bulls.

The weaker risk tone should also support the safe-haven appeal of gold. Investors may wait for the US consumer price data on Thursday for more clues on the country’s inflation.

Also, investors will pay attention to a speech by Raphael Bostic, the President of the Atlanta Fed, for more insights on the state of the US economy.

Gold bears remain in control: Flirting with Friday’s multi-week low

A break below the $2,030 area could trigger a slide to the next support level around the $2,024 region.

The Gold price may see a fresh selloff following the recent corrective bounce, dragging it to the lower boundary of the 50-day SMA around $2,012 to 2,011.

The psychological mark of $2,000 will act as a support and trigger a move toward a more significant downside target of $1,850. On the other hand, a break above the resistance zone at $2,064-2065 will likely push the price higher.

The Gold price may extend its recent gains beyond the mentioned resistance levels and test the psychological $2,100 mark once again. A sustained break above these resistance levels would negate the negative outlook and allow bulls to regain the upper hand.