Gold price maintained its strong bid tone through the first half of the European trading action and was last seen hovering near all-time highs, around the $1940-45 region.
Concerns over worsening US-China relations forced investors to take refuge in traditional safe-haven assets. This, in turn, assisted the precious metal to prolong its recent bullish momentum and continue gaining strong traction for the seventh consecutive session on Monday.
This comes on the back of growing worries that the economic recovery in the US could be grinding to a halt amid the resurgence in coronavirus cases. This coupled with some heavy selling around the US dollar provided an additional boost to the dollar-denominated commodity.
Meanwhile, investors also seemed to have started pricing in the possibility that the Fed would need to add more stimulus to support the economy. This was evident from the ongoing slide in the US Treasury bond yields, which further drove flows towards the non-yielding yellow metal.
The strong follow-through positive move could further be attributed to some technical buying above the previous all-time high, around the $1,921 region set in September 2011. However, extremely overbought conditions on short-term charts now warrant some caution for bullish traders amid the prevalent risk-on mood.
Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for any further near-term appreciating move. Market participants now look forward to the release of the US Durable Goods Orders data for some trading opportunities.