Gold Price Forecast: XAUUSD sits near multi-week high, around $1.680 amid weaker USD

• Gold attracts some dip-buying on Monday, though lacks bullish conviction.
• Renewed USD selling bias offers support to the dollar-denominated XAUUSD.
• Elevated US bond yields and the risk-on impulse caps the upside for the metal.

Gold reverses an early European session dip to the $1,667 area and climbs to a fresh daily top in the last hour, though lacks follow-through buying. The XAUUSD is currently placed around the $1,678-$1,680 region, just below a multi-week high touched in reaction to the mixed US monthly employment details on Friday.

The closely-watched US NFP report showed that the economy added 261K new jobs in October against the 200K anticipated. This, however, was well below the previous month's upwardly revised reading of 315K. Moreover, the unemployment rate rose to 3.7% from 3.5% in September and Average Hourly Earnings slowed to 4.7% YoY in October from 5% previous. The data fuels speculations that the Federal Reserve could slow the pace of future rate hikes and exerts some pressure on the US Dollar for the second straight day. This, in turn, offers some support to the dollar-denominated gold, though a combination of factors keeps a lid on any meaningful upside for spot prices.

The markets, meanwhile, are still pricing in the possibility of at least a 50 bps Fed rate hike move in December. This remains supportive of elevated US Treasury bond yields and acts as a headwind for the non-yielding gold. Apart from this, a goodish recovery in the US equity futures also contributes to keeping a lid on the safe-haven precious metal. Even from a technical perspective, spot prices, so far, have struggled to make it through a downward sloping trend-line resistance extending from the August swing high, warranting caution for aggressive bullish traders.

Hence, it will be prudent to wait for a sustained breakout through the aforementioned trend-line hurdle before positioning for any further appreciating move for gold. Traders also seem reluctant and might prefer to move to the sidelines ahead of the release of the latest US consumer inflation figures on Thursday. In the meantime, the US bond yields might influence the USD price dynamics in the absence of any relevant market-moving economic data. Apart from this, traders will take cues from the broader risk sentiment to grab short-term opportunities around gold.

Technical levels to watch