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On Monday, gold prices recovered from a more than three-month low as the U.S. 10-year Treasury yields weakened. The lower bond yield kept the metal above $1,800 after four consecutive weekly declines. It reduced the opportunity cost of holding the non-interest-bearing metal and boosted demand. However, the firm dollar capped bullion’s gains. The greenback remained near a 20-year peak and made gold more expensive for investors using rival currencies.

Spot gold is currently trading at $1,808.40 per ounce as of 0740 GMT.

City Index senior market analyst Matt Simpson commented that a slight increase in gold prices provided some support for traders. But he does not see a positive outlook for the metal. Even if the bullion bounced from $1,800, the momentum still favors a further decline.

The FXStreet Insights Team agreed that gold’s recovery attempts would remain limited in the short term. It is mainly because the current market environment does not support a prolonged weakening of the dollar. The factors that keep the American currency up remain intact. These include the Federal Reserve’s policy tightening, the Russia-Ukraine conflict, and inflation fears.

On the positive side, they noted that gold’s 200-day SMA forms dynamic resistance at $1,840 per ounce. That could serve as a recovery. But if the bullion does not consistently close above that level, the bearish bias would remain intact. On the downside, the team sees $1,800 as the first technical support.

Meanwhile, Cleveland Federal Reserve Bank President Loretta Mester said she would consider faster rate hikes in September if inflation data does not improve. There are indications that inflation has peaked. But Mester argued that inflation needs to move lower for several months before the central bank can make that conclusion. She added that risks to inflation remain on the upside due to the war in Ukraine and the potential supply chain disruption from China’s zero-COVID policy.

In physical trading, the price correction and wedding season bolstered the demand for gold in India. Local prices dropped to 49,960 rupees, the lowest in almost three months.

Gold demand in China also picked up on price dips despite the COVID-19 lockdown. Dealers reduced their discounts from $10 last week to $6-$8. A local trader expects “revenge buying” when the market reopens after COVID measures.