Gold prices continue to retreat from fresh multi-year highs registered last week around $1,747. After a failure to challenge the $1,750 area, the precious metal staged a local reversal and extends its bearish correction as traders prefer to take profit at the current levels. On Monday, the bullion dipped to 1.5-week lows at $1,671 and bounced partially. Still, the futures remain in the negative territory, threatening fresh lows.
Despite the latest positive headlines on the coronavirus outbreak from some regions, the situation in general remains dramatic, with the overall cases continuing to rise. At the moment, global stocks are trading in a mixed manner, and there are no clear signs of risk aversion, partly due to a lack of fresh news. In the immediate term, gold prices will likely retain the bearish bias and may even slip below the $1,670 level.
Investor sentiment has improved somewhat after Donald Trump said that the US businesses will get back to work soon. He also noted that his administration and Congress may soon reach an agreement on an aid package to boost a small-business loan program. Besides, China cut its benchmark lending rate in another effort to prop up the domestic economy.
In the longer run, the yellow metal still could challenge fresh highs and rally above the $1,750 handle as risky assets may yet suffer further losses amid the lingering recession threat. The incoming economic data from major countries will continue to disappoint down the road, suggesting risk-off sentiment may prevail in the future, especially as the pandemic continues.
For now, the precious metal needs to hold above the $1,640 important support. A break below this level may send the prices back below $1,600. If so, the bullion will hardly stay there for long, and buyers will reenter the game at more attractive levels. On the upside, the immediate key hurdle for bulls comes at $1,700.