Gold trades with modest losses near 1-week lows, around $1675 region

Gold edged lower on the first day of a new trading week and dropped to one-week lows, around the $1672-71 support area in the last hour.

The US dollar regained some positive traction on Monday and remained well supported by its status as the global reserve currency, which was seen as one of the key factors exerting some pressure on the dollar-denominated commodity.

The precious metal remained depressed for the second consecutive session and retreated further from multi-year tops set last week. However, a combination of factor extended some support and helped limit deeper losses, at least for now.

Persistent worries over the economic fallout from the coronavirus pandemic, combined with expectations for a prolonged period of low/negative interest rates and aggressive government stimulus measures further underpinned the non-yielding yellow metal.  

Hence, it will be prudent to wait for some strong follow-through selling below the $1672-70 horizontal support before confirming that the commodity might have topped out and positioning for any further near-term corrective slide.

In the absence of any major market-moving economic data due for releases on Monday, the key focus will remain on developments surrounding the coronavirus saga. This along with the USD price dynamics might produce some short-term trading opportunities.

Technical levels to watch