Gold drops to near 2-week lows, below $1455 level

• Renewed trade optimism continued weighed on the commodity’s safe-haven status.
• Positive US bond yields underpinned the USD and added to the intraday selling bias.
• Bears might now aim towards retesting monthly swing lows, around the $1445 region.

Gold edged lower through the early North-American session on Monday and dropped to near two-week lows, below the $1455 horizontal support in the last hour.

The precious metal extended last week's pullback from the vicinity of the 100-day SMA and lost some additional ground on the first day of a new trading week. Improving global risk sentiment, amid renewed US-China trade optimism, weighed on the commodity's safe-haven status and was seen as one of the key factors that could be attributed to the downtick for the fourth-consecutive session on Monday.

Weighed down by receding safe-haven demand

In the latest trade-related developments, the US President Donald Trump on Friday said that a deal with China was “potentially very close” and also indicated that he might not sign a bill passed by the Congress that supports Hong Kong. Adding to this, the US National Security Adviser Robert O'Brien told reporters over the weekend that a “phase one” US-China trade deal still appeared possible by the end of the year.

Fading safe-haven demand was further evident from a modest intraday uptick in the US Treasury bond yields, which further collaborated towards driving flows away from the non-yielding yellow metal. Meanwhile, positive US bond yields helped the US dollar to stand tall near two-week tops and did little to provide any respite to the dollar-denominated commodity amid absent relevant market moving economic releases.

It will now be interesting to see if the commodity is able to find any support at lower levels or the current pullback marks a near-term bearish breakdown, setting the stage for a slide back towards challenging monthly lows support near the $1445 region.

Technical levels to watch