Gold Price Analysis: Climbs to 1-month tops, inching closer to $1700 mark

• Gold regained positive traction for the second consecutive session on Monday.
• The set-up favours bullish traders and supports prospects for additional gains.

Gold reversed an early dip to the $1672 region and turned higher for the second straight session on Monday. The momentum lifted the commodity to one-month tops, or closer to the $1700 mark during the mid-European session.

A fresh wave of the global risk-aversion trade was seen as a key factor that underpinned the precious metal’s safe-haven demand. This coupled with a modest USD weakness provided an additional boost to the dollar-denominated commodity.

Meanwhile, technical indicators on the daily chart maintained their bullish bias and support prospects for a further appreciating move, albeit slightly overbought conditions on hourly charts warrant some caution for bullish traders.

Hence, any subsequent positive move is more likely to confront some fresh supply and remained capped near multi-year tops, around the $1703 region. That said, some follow-through buying will now be seen as a fresh trigger for bullish traders.

On the flip side, the $1680 region, closely followed by the $1674-72 area now seems to protect the immediate downside. Failure to defend the mentioned support levels might negate the positive outlook and prompt some technical selling.

The commodity might then accelerate the slide further towards $1652-50 intermediate support before eventually dropping to test the $1640 horizontal level.

Gold 4-hourly chart

Technical levels to watch