Gold moves closer to multi-year tops amid softer risk tone, weaker USD

Gold continued gaining traction for the fourth consecutive session on Friday and the intraday buying interest picked up pace during the early North American session. The commodity was last seen trading around the $1740 level, well within the striking distance of multi-year tops.

Growing fears about the second wave of the coronavirus infections and fading hopes for a quick global economic recovery overshadowed the recent optimism over the re-opening of economies in some parts of the world. This, in turn, led to a fresh leg down in the equity markets and benefitted the precious metal's safe-haven status.

The risk sentiment took a further hid amid worsening US-China relations, especially after the US Commerce Department announced to bar Huawei from acquiring semiconductors and chipsets made using US software and technology. This coupled with some aggressive US dollar selling provided an additional boost to the dollar-denominated commodity.

The USD witnessed some aggressive selling following the release of worse-than-expected US monthly Retail Sales figures. In fact, the headline Retail Sales plunged 16.4% in April as compared to a 12% decline anticipated. Adding to this, sales excluding autos fell 17.2% and the closely watched Retail Sales Control Group also recorded a steep decline of 15.3%.

This comes on the back of the overnight bullish breakthrough a symmetrical triangle resistance near the $1720-22 supply zone and supports prospects for additional near-term gains. However, slightly overbought conditions on the 4-hourly chart forced bullish traders to take some breather ahead of multi-year tops resistance near the $1748, set in April.

Technical levels to watch