Fundamental Analysis
Gold prices rose for a third straight day on Monday, rising to $2,667, or above a one-week high, in early European trading on Monday. Expectations that the Federal Reserve will continue to cut interest rates amid a favorable inflation outlook were the main factor driving flows into the non-yielding yellow metal. In addition, escalating geopolitical tensions in the Middle East also provided additional support for safe-haven bullion.
Meanwhile, U.S. Treasury yields and the U.S. dollar (USD) remained elevated amid rising bets for a less aggressive easing policy from the U.S. central bank. This, coupled with a generally positive risk tone and optimism over China’s commitment to increase debt to revive its economy, could keep safe-haven bullion from gaining any further ground. This, in turn, warrants some caution for bullish traders and before positioning for any further upside amid a partial holiday in the US.
Technical Analysis
With the bank holiday, gold’s range bounds are unlikely to see a strong breakout. The 2665 high is seen as the top zone for today if the price fails to break above this zone by mid-European session. SELL entries can be established around the current price zone and the target level is expected to be around 264x-262x. The 2740 zone remains a strong and notable port zone for today.