Gold Price Analysis: XAU/USD renews 5-day lows, drops below $1,710

• Gold starts the week on the back foot, loses more than 1%.
• Global equity indexes post heavy losses on Monday.
• US Dollar Index rises for the third straight day.

The XAU/USD pair started the new week on the back foot and dropped to a fresh five-day low off $1,708. Although the pair recovered slightly, it's still losing 1.15% on the day at $1,711.

Last week, the troy ounce of the precious metal capitalized on risk-off flows and gained more than $40. Although the market mood remains sour on Monday, XAU/USD is struggling to preserve its bullish momentum on broad-based USD strength.

DXY extends recovery into a third straight day

Following the sharp drop witnessed during the first half of the previous week, the US Dollar Index (DXY) staged a decisive rebound amid heightened worries over a second coronavirus wave hitting the US economy. After ending the week in the positive territory, the index is stretching higher on Monday, causing the bearish pressure on XAU/USD to remain intact. At the moment, the DXY is up 0.12% on the day at 97.20.

Meanwhile, the data from China are weighing on market sentiment on Monday. Retail Sales in May declined by 2.8% on a yearly basis to come in worse than the market expectation for a fall of 2%. Additionally, Industrial Production during that period rose by 4.4%, again missing analysts' estimate of 5%. 

In the second half of the day, the Federal Reserve Bank of New York's Empire State Manufacturing Survey will be looked upon for fresh impetus. More importantly, investors will be keeping a close eye on Wall Street's performance. As of writing, the S&P 500 futures were down 1.8% on the day, suggesting that major equity indexes in the US are likely to open deep in the negative territory.

Technical levels to watch for