Gold drops to near two-week lows, around $1920 region
- A strong pickup in the USD demand exerted some heavy pressure on gold.
- Bulls seemed rather unimpressed by a fresh leg down in equity markets.
Gold continued losing ground through the mid-European session and dropped to 1-1/2-week lows, around the $1921 region in the last hour.
The precious metal failed to capitalize on the previous week’s modest gains, instead came under some renewed selling pressure on the first day of a new trading week amid a strong pickup in the US dollar demand. Worries about the second wave of the coronavirus infections boosted the greenback’s status as the global reserve currency, which, in turn, weighed heavily on the dollar-denominated commodity.
Bulls failed to gain any respite from a selloff in the global equity markets, which tends to underpin demand for the safe-haven precious metal. The risk-off mood was further reinforced by a steep decline in the US Treasury bond yields, albeit did little to lend any support or revive demand for the non-yielding yellow metal.
Meanwhile, the latest leg of a sudden fall over the past hour or so could further be attributed to some technical selling below the $1930-28 horizontal support. Hence, some follow-through weakness towards challenging monthly lows, around the $1906 region, now looks a distinct possibility.
There isn’t any major market-moving economic data due for release from the US on Monday. Hence, the key focus will be on the Fed Chair Jerome Powell’s scheduled speech. Powell’s speech will be closely scrutinized for clues about the central bank’s near-term monetary policy outlook and produce some meaningful trading opportunities.