Gold clings to modest daily gains, just above $1775 level

• Gold reversed an early dip to the $1770 area amid sustained selling around the USD.
• Concerns about rising coronavirus cases globally remained supportive of the uptick.
• The risk-on mood, a goodish pickup in the US bond yields capped any further gains.

Gold edged higher during the early European session and was last seen trading near the top end of its daily trading range, around the $1776-78 region.

The emergence of some fresh US dollar selling assisted the dollar-denominated commodity to reverse an early dip to the $1770 area on the first day of a new trading week. This coupled with concerns about the continuous surge in coronavirus cases further extended some support to the safe-haven precious metal.

Despite growing market worries, the global risk sentiment remained well supported by growing optimism over a sharp V-shaped global economic recovery. The risk-on mood was reinforced by a goodish pickup in the US Treasury bond yields, which further collaborated towards capping the upside for the non-yielding yellow metal.

From a technical perspective, any meaningful pullback from multi-year tops has been attracting some dip-buying near a one-month-old ascending trend-line. The mentioned support, currently around the $1770 region, coincides with 200-hour SMA and should now act as a key pivotal point for short-term traders.

On the upside, bulls are likely to wait for some follow-through buying beyond the $1780 level before positioning for a move towards the ambitious $1800/ounce target. Market participants now look forward to the release of the US ISM Non-Manufacturing PMI, which might influence the USD price dynamics and provide some impetus.

Technical levels to watch