Gold Price Analysis: XAU/USD drops over 1% to fresh four-month lows near $1765

New Yoirk (Nov 30)  Following a weekly closing below the $1800 level, Gold (XAU/USD) resumes its downward momentum in Monday’s Asian trading, renewing four-month troughs below $1770.

The precious metal came under fresh selling pressure over the last hour, as the upbeat Chinese official Manufacturing and Services PMIs joined the coronavirus vaccine optimism, exacerbating the pain in the safe-haven gold.

Markets pinned expectations for a faster economic recovery next year, as the coronavirus vaccine could likely be rolled out as early as next month, fuelling hopes that life would return to normalcy early next year.

The economic optimism reduces the need for the additional fiscal and monetary stimulus, boding ill for the inflation-hedge gold. The bright metal lost 4.5% last week and surrendered the critical $1800 level, recording the worst week since end-September.

The latest leg lower in gold has tested the May 18 high of $1765 before recovering swiftly to $1771, where it now wavers. The spot is still down 0.96% on the day.

The selling pressure in the metal can be also attributed to the acceleration in the outflows from the exchange-traded funds (ETF), as investors believe gold’s rally to record highs could be overdone.

Meanwhile, a technical breach of the long-held support at $1850 has already triggered the bearish move. Further, the month-end flows could be also aggravating the downside in gold.

Looking ahead, gold will remain at the mercy of the vaccine updates and broader market sentiment, with all eyes on the US NFP data due later this week.

Gold Technical levels

Immediate support is now seen at the psychological $1750 level while to the upside the bulls need to scale the $1800 mark to reviving any recovery momentum.

FXstreet