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  • Gold continued scaling higher for the fifth straight session and shot to multi-year tops on Monday.
  • Overbought conditions on hourly charts prompted profit-taking amid the prevalent risk-on mood.
  • The set-up supports prospects for the emergence of some dip-buying ahead of the $1735 region.

Gold gained some strong follow-through traction for the fifth consecutive session and shot to fresh multi-year tops, around the $1765 region on Monday.

Monday’s strong positive move comes on the back of last week’s sustained breakthrough a symmetrical triangle, which constituted towards the formation of bullish continuation – pennant pattern on the daily chart.

The breakout supports prospects for a further near-term appreciating move. However, overbought conditions on daily charts kept a lid on any further gains for the safe-haven commodity amid the prevalent risk-on mood.

Meanwhile, technical indicators on the daily chart maintained their bullish bias and are still far from being in the overbought territory. This might attract some dip-buying at lower levels and help limit any meaningful pullback.

The commodity was last seen trading near the $1755-54 region and any subsequent fall is likely to find support near the $1748 level. This is followed by session lows, around the $1735 region, which should act as a key pivotal point for short-term traders.

Failure to defend the mentioned support might trigger some aggressive long-unwinding trade and accelerate the corrective slide further towards the symmetrical triangle resistance breakpoint, now turned support near the $1712 area.

On the flip side, the daily swing high, around the $1765 level, now seems to act as immediate resistance. Some follow-through buying has the potential to lift the commodity further towards the $1800 mark for the first time since 2012.

Gold daily chart

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Technical levels to watch