Gold makes sharp U-turn from multi-year highs, slumps to $1,730 area
- Gold struggles to find demand as risk rally intensifies.
- Wall Street surges higher after opening in positive territory.
- Broad-based USD weakness helps XAU/USD limit its losses.
The troy ounce of the precious metal rose to its highest level since December of 2012 at $1,765 on Monday but fell sharply during the American trading hours. As of writing, the XAU/USD pair was trading at $1,730, losing 0.7% on a daily basis.
Safe-haven assets lose interest on Monday
The risk rally at the start of the week seems to be weighing on the safe-haven demand and hurting gold. The positive results announced by Moderna, one of the leading biotech companies working on a coronavirus vaccine, on its first human trials seem to be the primary catalyst behind improving market sentiment.
Reflecting the risk-on market atmosphere, Wall Street's main indexes are posting decisive gains. At the moment, the Dow Jones Industrial Average is up 3.75% as the top-performer.
Meanwhile, the greenback remains on the back foot as investors are shifting their focus to risk-sensitive major currencies such as the EUR, GBP and AUD. The US Dollar Index (DXY), which gained more than 1% last week, is now losing 0.7% on the day at 99.66.
Although the USD weakness is helping XAU/USD limit its downside for the time being, the pair could remain under pressure if Asian stocks carry the rally into a second straight day.
On Tuesday, FOMC Chairman Jerome Powell will be testifying before the US Senate Banking Committee.
Technical levels to watch for