Gold jumps back closer to multi-year tops, around $1785-87 region

• Gold gained some strong positive traction on Monday amid some aggressive USD selling.
• Upbeat US ISM Non-Manufacturing PMI did little to provide any respite to the USD bulls.
• The upbeat market mood might turn out to be the only factor capping gains for the metal.
• Bulls now wait for some follow-through strength beyond the key $1800 psychological mark.

Gold edged higher through the early North American session and has now moved well within the striking distance of multi-year tops set last Wednesday.

The precious metal built on last week’s rebound from the $1757-58 region and gained some strong follow-through traction on the first day of a new trading week. The momentum was exclusively sponsored by the heavily offered tone surrounding the US dollar, which tends to underpin demand for the dollar-denominated commodity.

The greenback added to its recent losses and failed to gain any respite from a goodish pickup in the US Treasury bond yields. Even Monday’s release of stronger-than-expected US ISM Non-Manufacturing PMI, which jumped to 57.1 in June as against a rise to 50.1 expected from 45.4 previous, did little to impress the USD bulls.

The commodity was further supported by concerns that the ever-increasing coronavirus cases could trigger renewed lockdown measures. Adding to this, possibilities of some short-term trading stops being trigger above the $1778-80 region further seemed to have collaborated to the metal’s uptick over the past hour or so.

However, the upbeat market mood – supported by hopes of a sharp V-shaped global economic recovery – might keep a lid on any further gains for the precious metal. Nevertheless, bulls might still aim for a move towards the ambitious $1800/ounce target, above which the commodity is more likely to extend the upward trajectory.

Technical levels to watch