Gold stages a solid rebound from 3-week lows amid notable USD supply

   •  A modest USD retracement prompts some aggressive short-covering move.
   •  The positive momentum seemed unaffected by the prevalent risk-on mood.
   •  Today’s release of US ISM PMI will be looked upon for some short-term impetus.

Gold staged a solid rebound on Thursday and reversed the previous session’s entire downfall to three-week lows. 

The commodity stalled its recent corrective slide from over three month tops, touched last Friday, and has now snapped three consecutive days of losing streak.

The ongoing US Dollar retracement slide from 17-month tops was seen as one of the key factors prompting some aggressive short-covering move on Thursday.

With investors looking past upbeat US ADP report, traders seemed inclined to lighten USD bullish bets and eventually underpinned demand for the dollar-denominated commodity.

The up-move seemed rather unaffected by the prevalent risk-on mood, as depicted by a positive tone across equity markets and which tends to dent the precious metal's safe-haven status. 

It, however, remains to be seen if bulls are able to maintain their dominant position or firming prospects for gradual Fed rate hikes beyond 2018 keeps a lid on any further up-move for the non-yielding yellow metal.

With the USD price dynamics turning out to be an exclusive driver through the early European session, traders now look forward to the release of US ISM manufacturing PMI for some short-term impetus.

The key focus, however, will be on Friday's keenly watched US monthly jobs report, popularly known as NFP, which will play an important role in determining the commodity's near-term trajectory.

Technical levels to watch

Immediate resistance is pegged near the $1226 region, above which the positive momentum could further get extended towards $1234-35 supply zone en-route multi-month tops, around the $1243 level.

On the flip side, the $1219 region (100-DMA) now seems to protect the immediate downside, which if broken might turn the commodity to slide back towards testing overnight swing low level of $1212.