Gold hangs near weekly lows, just below $1935 level

Gold refreshed weekly lows during the early European session, albeit lacked any strong follow-through selling and quickly recovered a bit thereafter.

The precious metal extended this week's retracement slide from the $1992 area, or near two-week tops and remained depressed for the second consecutive session on Thursday. The downtick was sponsored by a bid tone surrounding the US dollar and the upbeat market mood.

The USD rebound from two-year lows was tied in part to Tuesday's upbeat US ISM Manufacturing PMI, which jumped to a nearly two-year high in August. Even Wednesday's weaker-than-expected US ADP report failed to hinder the greenback's ongoing recovery momentum.

Sustained USD buying was seen as one of the key factors that weighed on the dollar-denominated commodity. Apart from this, the prevalent risk-on environment further dented the precious metal's safe-haven demand and contributed to the modest downtick.

Prospects of additional US fiscal stimulus and Thursday's upbeat Chinese Caixin Services PMI boosted investors' confidence. The risk-on flow was reinforced by a pickup in the US Treasury bond yields, which exerted some additional pressure on the non-yielding yellow metal.

However, the downside remains limited, at least for the time being, with bears still awaiting a sustained break below a multi-week-old ascending trend-line support. This makes it prudent to wait for some follow-through selling before positioning for any further weakness.

Market participants now look forward to the US economic docket, highlighting the release of ISM Non-Manufacturing PMI. The data might influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session.

Technical levels to watch