Risk-off sentiment drives gold higher

Gold prices extend gains on Monday, fueled by the risk aversion that has intensified at the start of a new trade week. The bullion is trading not far from the highs of this month, registered on Thursday around $1,320. In the short-term charts, the prices were pushed into overbought territory, which suggests some setbacks could occur in the near term.

Investor sentiment has deteriorated after a batch of dismal economic data from major economies on Friday that brought back fears over an economic slowdown. Additionally, the dollar demand remains subdued after a dovish shift in the Fed policy last week. All these factors are playing into gold’s hands.

On the other hand, the greenback seems to remain the best of a bad bunch for now as the US currency is benefitting from a series of bad economic data in the euro area as well as from the ongoing Brexit drama. This in turn caps demand for the yellow metal.

In a wider picture, the bullion may yet refresh March highs after a pullback as traders could seek to re-enter longs amid the increasing worries over the health of the global economy.

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