Gold inches back closer to 2-week tops on softer USD

   •  The latest FOMC policy updates helped rebound sharply from 3-week tops.
   •  Follow-through USD selling/weaker US bond yields should limit any downside.

Gold quickly reversed an intraday dip to $1327 area and moved within striking distance of 2-week tops, set in the previous session.

The precious metal rebounded sharply from three-week lows on Wednesday after the Fed raised interest rates by 25bps but stuck to its previous guidance of at least two more hikes in 2018, which dampened market expectations over a faster pace of monetary policy tightening cycle. 

The outlook prompted some aggressive US Dollar selling, which remained unabated through the early European session on Thursday and continued underpinning demand for dollar-denominated commodities - like gold. 

Adding to this, a follow-through retracement in the US Treasury bond yields and reviving safe-haven demand, amid growing concerns over the US President Donald Trump's plan to announce fresh tariffs, remained supportive for the non-yielding yellow metal's safe-haven appeal and might now limit any immediate downside. 

With the only scheduled release of weekly jobless claims data, the US economic docket lacks any major market-moving economic releases and hence, the USD price dynamics/broader market risk sentiment might continue to act as key determinants of the commodity's momentum on Thursday.

Technical levels to watch

The $1336-37 region might continue to act as an immediate hurdle, above which the metal seems to surpass $1341 resistance and aim towards testing $1352-53 supply zone. On the flip side, $1328-27 area now seems to protect the immediate downside, which if broken could drag the commodity back towards $1316 horizontal support.