Gold trades with modest losses near $1720 area, downside seems limited

• Gold edged lower for the second consecutive session amid improving global risk sentiment.
• The prevalent USD selling bias extended some support to the dollar-denominated commodity.
• The metal remains confined in Friday’s range, warranting some caution for aggressive traders.

Gold traded with a mild negative bias through the early European session, albeit has managed to recover a part of its early slide to the $1713 area.

The precious metal extended last week's modest pullback from the $1736-38 supply zone and remained depressed for the second consecutive session on Monday amid a further improvement in the global risk sentiment.

Hopes for the reopening of the US economy and optimism over drug trials for treatments of the deadly disease boosted investors' confidence, which undermined demand for traditional safe-haven assets, including gold.

Meanwhile, the latest optimism dented the US dollar's status as the global reserve currency, which eventually extended some support to the dollar-denominated commodity and helped limit deeper losses, at least for now.

The yellow metal once attracted some dip-buying ahead of the $1710 horizontal support, which should now act as a key pivotal point for intraday traders amid absent relevant market moving economic releases from the US.

Hence, it will be prudent to wait for some follow-through selling before positioning for any further depreciating move. Conversely, a sustained strength above the $1736-38 barrier should pave the way for a move back towards multi-year tops.

Technical levels to watch