Good morning, traders.

During Monday’s Asian trading session, the yellow metal prices failed to extend their early-day winning streak. GOLD edged lower around the $1,724 level mainly due to the upbeat market sentiment triggered by the passage of the latest U.S. stimulus measures. It should be noted that U.S. President Joe Biden signed the $1.9 trillion stimulus package into law last week, which propelled yields on benchmark 10-year notes upwards. The upticks in Treasury yields were seen as one of the key factors that undermined gold prices.

Meanwhile, the continued optimism on the U.S. economic recovery from COVID-19 as well as China’s upbeat Retail Sales and Industrial Production details, which suggest the remarkable recovery in the world’s 2nd-largest economy, keeps the market trading sentiment upbeat, which in turn decreases the safe-haven demand in the market and contributes to the yellow metal’s losses.

In contrast to this, the long-lasting US-China tussle probes the risk-on mood, which may lend some support to the safe-haven gold. As of writing, the yellow metal prices are currently trading at 1,726.88 and consolidating in the range between 1,724.33 and 1,734.08.

The market trading sentiment succeeded in extending its early-day positive performance and is still flashing green on the day as the positive appearance of the S&P 500 Futures tends to highlight the risk-on sentiment. The reason could be tied to the upbeat comments from U.S. President Joe Biden and AstraZeneca’s rejection of claims that the vaccine causes blood clotting.

At the data front, China’s January-February Retail Sales YoY, the number came in at 33.8% vs. +32.0% expected and +4.6% previous, with Industrial Production YoY at +35.1% and +30.0% expected and +7.3% previous. In the meantime, Fixed Asset Investment YoY unchanged at 35.0% vs. +40.0% expected and +2.9% previous. Across the ocean, the U.S. stimulus and hopes for more fiscal relief also played its major role in underpinning the market trading sentiment. Also supporting the mood could be the chatters that Tokyo is not looking for an extension of the virus-led emergency. In that way, the positive tone around the market sentiment is capping the gains in gold prices.

Despite the risk-on mood, the broad-based U.S. dollar extended its previous-session winning streak and took some further bids on the day, possibly due to the upbeat U.S. data released on Friday – the Producer Price Index (PPI) increased 0.5% month-on-month in February, in line in forecasts. It grew 2.8% year-on-year, against the forecast of 2.7%. The core PPI increased 0.2% month-on-month and 2.5% year-on-year. This was seen as one of the key factors that underpin the U.S. dollar. Meanwhile, the growing market bets regarding faster U.S. economic recovery from the pandemic are also lending some additional support to the U.S. dollar. The gains in the U.S. dollar were seen as one of the key factors that kept the lid on any additional gains in the gold prices as the price of the precious metal is inversely related to the price of the U.S. dollar. The U.S. dollar climbed 0.1% against the yen to 109.125 yen, drifting near its highest since June 2020.

Elsewhere, the gold prices’ losses could be short-lived or temporary as the long-lasting concerns between the U.S. and China probe the risk-on mood, with the upcoming visit of the U.S. Secretary of State Antony Blinken’s to Asia, amid the fresh Sino-American tussle.

In the absence of significant data/events on the day, the market traders will keep their eyes on broader market risk sentiment and the USD price dynamics, which may provide some trading opportunities ahead.

Daily Support and ResistanceS1 1658.18
S2 1688.49
S3 1708
Pivot Point 1718.8
R1 1738.31
R2 1749.11
R3 1779.42

GOLD continues trading with a neutral bias at 1,723, exhibiting a strong bullish retracement above the support level of 1,722. On the higher side, the bullish crossover of 1,739 can extend further buying trend until 1,754 level. The precious metal gold has recently crossed over the 50 periods EMA suggesting a bullish bias. Today, buying can be seen from 1,723 until 1,739 level. The MACD and RSI neutral a buying trend today; therefore, the precious metal may head further higher until 1,739. Good luck!