Gold hits fresh multi-year tops, eyeing $1700 mark

Gold held on to its strong gains through the early European session and climbed to fresh multi-year tops, around the $1685 region in the last hour.

Market concerns that the global economic growth could take a hit amid the outbreak of the deadly coronavirus were further fueled by reports of a sudden rise in the number of confirmed cases in the north of Italy.

Buying remains unabated

The weekend news rattled investors and triggered a fresh wave of the global risk-aversion trade on the first day of a new trading week, which eventually boosted demand for traditional safe-haven assets, including gold.

The flight to safety was evident from a sea of red across equity markets and reinforced by a slump in the US Treasury bond yields, which further played their part in driving flows towards the non-yielding yellow metal.

The precious metal added to its recent momentum and gained some strong follow-through traction for the fifth consecutive session on Monday – also marking its seventh day of a positive move in the previous eight.

Meanwhile, some renewed US dollar buying interest, which tends to undermine demand for the dollar-denominated commodity, did little to hinder the ongoing momentum to the highest level since January 2013.

With the coronavirus-led risk-off mood turning out to be an exclusive driver of the commodity's move up, bullish traders largely shrugged off extremely overbought conditions on short/medium-term charts.

Hence, an extension of the bullish trajectory, possibly towards reclaiming the $1700 round-figure mark, now looks a distinct possibility amid absent relevant market-moving economic releases from the US.

Technical levels to watch