Gold is pulling back after a strong uptrending move took it to new highs of $2,685 last week.
A rally in Chinese equities and an improved outlook for the property market are diverting capital away from the safe-haven.
Technically, XAU/USD threatens to exit overbought territory, signaling a deeper pullback could evolve.
Gold (XAU/USD) pulls back to trade in the $2,650s per troy ounce on Monday, as traders take profit after last week’s almost 1.4% rally to new all time highs. A historic rally in Chinese stocks, which saw the benchmark CSI 300 gain over 7.50% during the Asian session on Monday alone, as well as a brighter outlook for the Chinese property market due to falling mortgage rates diverts capital away from Gold as a safe-haven.
Gold traders have been surfing a wave that started after a seismic shift in the US, where the Federal Reserve (Fed) opted to cut interest rates by a “jumbo” 0.50% at their September meeting, lowering the opportunity cost of holding the precious metal. However, better-than-expected US data since then have slightly lowered the chances of the Fed making another aggressive 50 basis point (bps) rate cut in November, though chances of this scenario occurring still remain above 50%, according to the CME FedWatch tool.
