Gold retreats from multi-week tops, slides below $1580 level
- Gold weighed down by stability in financial markets/fading safe-haven demand.
- Positive US bond yields, a modest USD uptick further added to the selling bias.
Gold dropped to fresh session lows, around the $1574 region in the last hour and has now reversed the previous session's positive move.
Having touched a near four-week high level of $1592, the precious metal took a turn for the worst and extended its intraday pullback through the early European session on Monday amid fading safe-haven demand.
Despite the early plunge in the Chinese stock markets, the liquidity injections offered up by the PBoC tempered the market’s most immediate concerns and led to some stability in the global financial markets.
A modest rebound in the risk sentiment weighed on traditional safe-haven assets. This allowed the US Treasury bond yields to rebound sharply and eventually drove flows away from the non-yielding yellow metal.
Meanwhile, a goodish pickup in the US bond yields underpinned the US dollar demand, which further played its part in exerting some additional downward pressure on the dollar-denominated commodity.
It, however, remains to be seen if the commodity continues with its corrective slide or once again manages to attract some dip-buying at lower levels amid a surge in bets for a further policy easing by the Fed.
It is worth reporting that the Fed funds futures are now pricing in over 25% chances of a rate cut in March and around 60% chances of a cut by June meeting, which might help limit deeper losses, at least for now.
Moving ahead, market participants now look forward to the release of the US ISM Manufacturing PMI in order to grab for some short-term trading opportunities later during the early North-American session.
Technical levels to watch