Gold clings to gains above $1700 mark amid weaker risk sentiment

• The risk-off mood assisted the safe-haven commodity to gain some traction on Monday.
• Resurgent USD demand seemed to be the only factor capping the upside for the metal.

Gold edged higher during the early European session on Monday and is currently placed near the top end of its daily trading range, around the $1705-06 region.

The safe-haven commodity built on the previous session's goodish intraday bounce from the $1670 level and gained some follow-through traction for the second consecutive session on Monday amid the prevalent risk-off mood.

A US-China spat over the origin of the coronavirus overshadowed the recent optimism about the re-opening of economies in some parts of the world and led to a further deterioration in the global risk sentiment.

Diminishing investors' appetite for perceived riskier assets was evident from a weaker tone around the global equity markets, which eventually provided a goodish lift to traditional safe-haven assets, including gold.

The latest development comes amid persistent uncertainty over the severity of the economic damage caused by the coronavirus-induced lockdowns, which benefitted the US dollar's status as the global reserve currency.

Resurgent USD demand, to some extent, negated the positive factor and seemed to be the only factor that might keep a lid on any strong follow-through gain for the dollar-denominated commodity, at least for the time being.

Hence, it will be prudent to wait for a sustained buying before traders start positioning for any further near-term appreciating move amid absent relevant market-moving US economic releases on the first day of a new week.

Technical levels to watch