Gold eases from all-time highs, still well bid above $1930 level

• A combination of supporting factors pushed the precious metal to record highs on Monday.
• Extremely overbought conditions might have prompted some profit-taking at higher levels.
• Any meaningful slide pullback might still be seen as a buying opportunity and remain limited.

Gold maintained its strong bid tone through the early North American session, albeit witnessed a modest pullback from all-time highs set earlier this Monday.

The precious metal prolonged its recent strong bullish trajectory and shot to fresh record high level of $1945 on the first day of a new trading week. Concerns about worsening US-China relations forced investors to take refuge in traditional safe-haven assets and eventually provided a strong boost to the commodity.

Meanwhile, worries that the economic recovery in the US could be grinding to a halt in the wake of the resurgence in coronavirus cases fueled speculations of more stimulus from the Fed. This was evident from the ongoing slide in the US Treasury bond yields, which further drove flows towards the non-yielding yellow metal.

An uncertain US economic backdrop led to some strong follow-through selling in the US dollar, which failed to gain any respite from Monday's mixed US Durable Goods Orders report. A broad-based USD weakness was also seen as a key factor that benefitted the dollar-denominated commodity and remained supportive of the strong move up.

However, extremely overstretched conditions on short-term charts prompted some profit-taking just ahead of the $1950 level. However, any meaningful pullback might still be seen as a buying opportunity. This, in turn, should help limit any meaningful downside near the $1900 round-figure mark.

Technical levels to watch