Gold eases from multi-year tops, still above $1600 mark

Gold edged lower on Thursday and dropped to fresh session lows in the last hour, back closer to the $1600 round-figure mark.

The buying interest around the safe-haven precious metal is starting to fade amid a further improvement in the global risk sentiment. The PBoC's latest move to cut the benchmark loan prime rate on Thursday signalled that China is ready to introduce additional measures to offset the economic impact from the coronavirus outbreak.

Gold weighed down by a combination of factors

The commodity has now reversed a major part of the previous session's positive move to multi-year tops and was further weighed down by sustained US dollar buying interest. In fact, the USD Index climbed to near three-year tops and further contributed to the weaker tone surrounding the dollar-denominated.

This coupled with a modest uptick in the US Treasury bond yields also played their part in driving flows away from the non-yielding commodity. However, the downside seemed cushioned, at least for the time being, as investors remain concerns over deepening economic fallout from the outbreak of the deadly virus.

Hence, it will be prudent to wait for some strong follow-through selling before positioning for any further near-term corrective slide. A sustained weakness back below the $1600 mark will confirm that the commodity might have already topped and prompt some additional long-unwinding trade.

Moving ahead, market participants now look forward to the US economic docket, featuring the release of the usual weekly jobless claims and the Philly Fed Manufacturing Index. The data might influence the USD price dynamics and produce some short-term trading opportunities later this Thursday.

Technical levels to watch