Gold prices were $5 lower (0.3%) in early-Monday trading after the precious metal failed to hold a bounce from the $1,800 support level on Friday.
Gold has been struggling over the last three weeks despite a continued drop in the U.S. dollar. This highlights an underlying weakness in the price of gold and it is being driven by low demand for safe-havens. The emergence of vaccine candidates has increased the chances that lockdowns are behind us, which will limit the economic damage and the size of government stimulus packages.
The other problem for gold is a lack of inflation and this has weighed on bullion for years. Despite central bank balance sheets growing to huge levels, much of the increase ends up in reserves and not in the real economy. This was highlighted in the summer of 2020 when the first U.S. stimulus checks landed. Prices were seen rising in stocks because retail money flooded into beaten-down sectors. There is no near-term inflationary threat and its another reason why gold pulling back.
Gold Price Technical Outlook
Gold saw a weak two-day bounce from $1,800 and then broke down throught the support. Price is now looking for buyers here ahead of the $1,750 support with $1,774 being the low this morning. The $1,700 level would be the next target on the downside. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
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XAUUSD Daily Chart
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