Gold price drifts lower for the second straight day amid reduced bets for aggressive Fed easing.

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• Gold price drifts lower for the second straight day amid reduced bets for aggressive Fed easing.
• Rising US bond yields lifted the USD to a nearly two-month high and undermined the XAU/USD.
• Geopolitical risks and China’s economic woes could lend support to the safe-haven commodity.

Gold price (XAU/USD) remains under some selling pressure for the second successive day on Monday and seems vulnerable to extending last week’s retracement slide from the $2,065 area, or a one-month peak. Friday’s blockbuster US jobs report reaffirmed market expectations that the Federal Reserve (Fed) will keep interest rates higher for longer, which remains supportive of rising US Treasury bond yields and lifts the US Dollar (USD) to its highest level since December 11. This, in turn, is seen as a key factor undermining the non-yielding yellow metal.

Apart from this, the underlying bullish tone across the global equity markets further contributes to the offered tone surrounding the Gold price. That said, the risk of a further escalation of military action in the Middle East and persistent worries about a slowdown in China lend support to the safe-haven XAU/USD, warranting some caution for bearish traders. Traders now look to the release of the US ISM Services PMI, which, along with the US bond yields, the USD price dynamics and the broader risk sentiment, should provide some impetus to the metal.

From a technical perspective, acceptance below the 50-day Simple Moving Average and a subsequent slide below Friday’s swing low, around the $2,028-2,027 region, could drag the Gold price to the $2,012-2,010 area. This is followed by the $2,000 psychological mark, which if broken decisively might shift the bias in favour of bearish traders and expose the 100-day SMA support near the $1,983-1,982 region. The XAU/USD could eventually drop to challenge the very important 200-day SMA, near the $1,965 area.

On the flip side, momentum beyond the Asian session peak, around the $2,042 region, is likely to confront a stiff hurdle near the $2,054-2,055 zone ahead of the $2,065 area or last week’s swing high. Given that oscillators on the daily chart are just holding in the positive territory, some follow-through buying has the potential to lift the Gold price towards the $2,078-2,079 region, or the YTD peak set in January. The subsequent move-up should allow the XAU/USD to reclaim the $2,100 mark and climb further to $2,020 resistance.

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