Gold drops to multi-day lows, around $1325 level

• Improving risk sentiment dents the commodity’s safe-haven status.
• A goodish bounce in the US bond yields/USD adds to the selling bias.

Gold remained under some heavy selling pressure through the early European session and dropped to multi-day lows, around the $1325 region in the last hour.

The precious metal failed to capitalize on last week's strong up-move, further boosted by Friday's weaker US monthly jobs report, and opened with a bearish gap at the start of a new trading week. 

Encouraging trade-related development, wherein the US President Donald Trump suspended plans to impose tariffs on Mexico, boosted the global risk sentiment and undermined the precious metal's safe-haven demand.

The risk-on mood was evident from a goodish rebound in the US Treasury bond yields, which helped ease the recent US Dollar bearish pressure and further drove flows away from the dollar-denominated commodity.

With today's steep decline, the metal has now erased gains recorded in the previous four trading session, though has still managed to hold its neck above the key $1300 psychological mark amid increasing Fed rate cut bets.

Hence, it would be prudent to wait for a strong follow-through selling before confirming that the non-yielding yellow metal might have actually topped out in the near-term or positioning for any further depreciating move.

Technical levels to watch