Gold continues to trade in narrow range near $1,720

• Markets turn risk-positive on Monday on renewed coronavirus optimism.
• US Dollar Index drops below 100 after posting modest gains last week.
• Coming up: Dallas Fed Manufacturing Index for April.

The XAU/USD pair gained 2.73% last week and registered its highest weekly close since September of 2012 at $1,729. With the market sentiment turning positive on Monday, the precious metal struggled to preserve its strength and the pair staged a technical correction. As of writing, the pair, which touched a daily low of $1,712.88, was trading at $1,720, down 0.5% on a daily basis.

Global stocks rally on Monday

The slowdown witnessed in the pace of new coronavirus infections and fatalities, especially in Europe, over the weekend allowed risk flows to start dominating financial markets on Monday. Major Asian equity indexes finished the day decisively higher and European stocks surged higher to weigh on the demand for safe-haven assets such as gold.

However, the greenback, which has been capitalizing on flight-to-safety since the beginning of the coronavirus crisis, failed to attract investors and helped the pair limit its losses. At the moment, the US Dollar Index is down 0.35% on the day to reflect the broad USD weakness. 

The only data featured in the US economic docket will be the Federal Reserve Bank of Dallas' Texas Manufacturing Outlook Survey. Nevertheless, market participants are likely to continue to react to changes in risk perception.

Technical levels to watch for