Gold on the defensive below $1750 level, bullish bias remains

Gold failed to capitalize on its early uptick to over one-month tops and was last seen trading near the lower end of its daily range, around the $1746-45 region.

The recent market worries about the second wave of coronavirus infections were further fueled by the fact that the World Health Organization (WHO) on Sunday reported a record increase in the number of new cases globally. This, in turn, weighed on investors' sentiment and provided an early lift to the safe-haven precious metal.

The commodity shot to the highest level since May 18, around the $1759 region. The early positive move, however, fizzled out rather quickly amid a turnaround in the global risk sentiment, as depicted by a goodish bounce in the US equity futures. The commodity has now filled the weekly bullish gaps, albeit the downside seems cushioned.

Some renewed US dollar selling bias might extend some support to the dollar-denominated commodity and help limit any deeper losses, at least for the time being. This coupled with the fact that the yellow metal on Friday broke through an important barrier – near the $1730-32 region – supports prospects for the emergence of some dip-buying.

Hence, the pullback might still be categorized as corrective in nature and seen as an opportunity to initiate some fresh bullish positions. The commodity seems more likely to aim back towards retesting multi-year tops, around the $1765 region amid relatively thin US economic docket, featuring the only release of Existing Home Sales data.

Technical levels to watch