Gold prices are facing headwinds in European trading on Monday, remaining defensive below the $2,750 mark after earlier gains evaporated. Currently, the precious metal is finding support around the $2,730 demand area, but the outlook remains uncertain due to the looming risks associated with the U.S. presidential election and ongoing geopolitical tensions in the Middle East.

Despite these challenges, a modest uptick in the 14-day Relative Strength Index (RSI) to nearly 60 has sparked renewed buying interest in gold. For gold buyers, reclaiming the critical resistance level at $2,746 on a daily closing basis is essential to resuming the recent uptrend. This level coincides with the 23.6% Fibonacci retracement of the latest rally, which began at the October 10 low of $2,604 and peaked at a historic high of $2,790.

The bullish momentum remains intact, with the next significant target set at the all-time high of $2,790. However, should gold prices dip below the $2,730 mark, the focus will shift to the 38.2% Fibonacci support at $2,718. A daily close below this level could challenge the critical $2,700 confluence zone, where the 50% Fibonacci level of the ascent intersects with the 21-day Simple Moving Average (SMA). Further declines could see gold testing the 61.8% Fibonacci support at $2,673.

This stall in gold’s correction comes amid a backdrop of fluctuating U.S. dollar dynamics. Following the release of a new opinion poll on the U.S. election over the weekend, the dollar has come under selling pressure. The Des Moines Register/Mediacom Iowa Poll indicated that Democratic presidential candidate Kamala Harris has surged past Republican Donald Trump, showcasing a notable shift in voter sentiment just days before the election.

Also read : Market Reactions To US Elections- How Political Odds Affect GBP/USD Movements?

With Americans heading to the polls on Tuesday, the stakes are high for both candidates. Simultaneously, U.S. Treasury bond yields are declining, reflecting cautious market sentiment and expectations of a 25 basis points interest rate cut by the Federal Reserve later this week. This anticipated move is particularly beneficial for non-yielding assets like gold.