Gold prices extend the rally on Monday, with the bullion is trying to get back above the $1,400 psychological level, clinging to six-year highs registered at the end of last week. This is the fifth day of gains in a row as demand for the precious metal remains robust due to rising tensions between the US and Iran, a dovish shift by major central banks, and a widespread weakness in the greenback.
During the weekend, Trump announced fresh sanctions against Tehran and said he was not seeking war with Iran after a senior Iranian military official warned any conflict in the Gulf region could spread uncontrollably and threaten the lives of US troops. Should Washington impose additional sanctions, tensions could rise further, which will boost the safe-haven demand for gold.
On the other hand, there is a risk for gold from the upcoming G20 summit in Japan. The US and China leaders are expected to meet on the sidelines of the summit and any positive news from this front may fuel risk-on sentiment and thus decrease the appeal of the bullion later this week. Besides, there are some signs that prices are entering the overbought conditions, which could add to the potential downside pressure. Should a bearish correction take place, the immediate meaningful support comes at $1,380.