Gold corrects further from multi-year tops, slides to $1635 area

Gold witnessed some follow-through long-unwinding trade on Tuesday and extended the previous session's sharp intraday retracement from seven-year tops.

As investors assessed the economic impact of a surge in confirmed coronavirus cases globally, the precious metal witnessed a dramatic turnaround on Monday and finally settled with only modest gains around the $1659 region.

Given the recent upsurge of over 9% since the beginning of this month, the pullback could be solely attributed to some profit-taking amid extremely overbought conditions on short-term charts and lacked any obvious fundamental catalyst.

The downfall extended through the Asian session on Tuesday and was further fueled by some stability in the financial markets, which tends to undermine demand for traditional safe-haven demand and dragged the commodity to $1633 area.

This coupled with a goodish rebound in the US Treasury bond yields further drove flows away from the non-yielding yellow metal and contributed to the ongoing corrective slide, with bulls shrugging off a subdued US dollar price action.

Market participants now look forward to the US economic docket, highlighting the release of the Conference Board's Consumer Confidence Index, which might influence the USD price dynamics and provide some impetus to the dollar-denominated commodity.

Technical levels to watch