Gold retreats below $2,020 as US yields push higher

Gold price trades below $2,020 in the American session on Monday. The benchmark 10-year US Treasury bond yield is up more than 3% on the day above 4.1% following Friday's upsurge, forcing XAU/USD to stay on the back foot.

Technical Overview

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.

Fundamental Overview

Gold price (XAU/USD) extends last week's pullback from the $2,065 area, or a one-month peak and drifts lower through the first half of the European session on Monday. The downfall drags the precious metal to a one-week low, around the $2,022-2,021 area in the last hour and is sponsored by expectations that the Federal Reserve (Fed) will keep rates higher for longer, bolstered by Friday's upbeat US NFP report. 

The outlook, meanwhile, remains supportive of a further rise in the US Treasury bond yields, which assists the US Dollar (USD) to stand tall near its highest level since December 11 and contributes to driving flows away from the non-yielding Gold price. Meanwhile, persistent geopolitical risk stemming from conflicts in the Middle East and China''s economic woes fail to lend any support to the safe-haven XAU/USD.

The aforementioned fundamental backdrop favours bearish traders and suggests that the path of least resistance for the Gold price is to the downside. Market participants now look to the release of the US ISM Services PMI, due later during the early North American session. This, along with speeches by influential FOMC members and the US bond yields, will drive the USD and provide some impetus to the precious metal.