Gold trades with modest losses around $1735 level, downside seems limited

Gold traded with a mild negative bias through the early European session and was last seen hovering near the lower end of its daily range, around the $1735 region.

The precious metal failed to capitalize on the previous day's positive move to over one-week tops and for now, seems to have stalled its recent positive move from sub-$1700 levels. The downtick lacked any obvious catalyst and could be solely attributed to a modest US dollar bounce, which tends to undermine demand for the dollar-denominated commodity.

This comes amid the recent optimism about the easing of lockdown restrictions across the world, which fueled hopes of a sharp V-shaped recovery for the global economy. This, in turn, held investors from placing any aggressive bullish bets around the safe-haven commodity. However, concerns over worsening US-China relations might help limit deeper losses.

It is worth reporting that China on Monday halted orders of US soybeans and other agricultural products, and also cancelled some pork orders. Adding to this, widespread protests in dozens of American cities over the death of George Floyd at the hands of Minneapolis police might also extend some support to the yellow metal, rather attract some dip-buying.

Hence, it will be prudent to wait for some strong follow-through selling before traders start positioning for any further near-term depreciating move. There isn't any major market-moving economic data due for release on Tuesday and hence, the USD price dynamics along with the broader market risk sentiment will play a key role in influencing the commodity's move.

Technical levels to watch