Gold Price Analysis: XAU/USD seems vulnerable, upside remains capped near 200-hour SMA

• Gold seesawed between tepid gains/minor losses through the mid-European session on Monday.
• The technical set-up still favours bearish traders and supports prospects for additional weakness.
• A sustained break below the $1850-48 strong horizontal support will reinforce the negative outlook.

Gold failed to capitalize on its early positive move, instead met with some fresh supply near the $1876 area and refreshed daily lows during the mid-European session. The pullback, however, lacked any strong follow-through and the commodity remained well within the Friday's broader trading range.

Meanwhile, the intraday uptick once again faltered near 200-hour SMA, which is closely followed by a short-term ascending trend-channel support breakpoint, around the $1880 region. The yellow metal's inability to register any meaningful recovery suggests that the near-term selling might still be far from being over and favours bearish traders.

The negative outlook is further reinforced by the fact bearish technical indicators on daily/hourly charts. That said, the prevalent USD selling bias might help limit losses for the dollar-denominated commodity and thus, warrants some caution before positioning for an extension of the recent sharp pullback from the $1965 supply zone.

Nevertheless, the XAU/USD still seems vulnerable to slide back towards testing a strong horizontal support near the $1850-48 region. Some follow-through selling will be seen as a fresh trigger for bearish traders and set the stage for a slide towards the $1820 congestion zone en-route the very important 200-day SMA, around the $1795 region.

On the flip side, any meaningful recovery beyond the $1880 support-turned-resistance might be seen as a selling opportunity. This, in turn, should keep a lid on any further positive move for the precious metal near the $1900 round-figure mark.

XAU/USD 1-hourly chart

Technical levels to watch