Gold Price Analysis: XAU/USD rebounds from 1-week lows, still in the red below $1940 level

• Gold dropped to over one-week lows in the last hour, albeit quickly recovered a bit thereafter.
• A strong pickup in the USD demand was seen as a key factor exerting pressure on the metal.
• Weaker risk sentiment, sliding US bond yields extended some support and helped limit losses.

Gold recovered around $30 from the early North American session fall to over one-week lows and was last seen trading with only modest losses, just below the $1940 level.

The precious metal failed to capitalize on the previous day's positive move and met with some fresh supply on Friday. The intraday selling pressure picked up pace in the last hour amid resurgent US dollar demand, which tends to undermine the dollar-denominated commodity.

However, a steep fall in the equity markets benefitted the precious metal's safe-haven status. The global flight to safety was reinforced by sliding US Treasury bond yields, which further extended some support to the non-yielding yellow metal, instead attracted some dip-buying.

Despite the strong rebound, the commodity lacked any strong follow-through remained well below daily swing highs, around the $1955 region. This warrants caution for bulls and makes it prudent to wait for some follow-through buying before positioning for any further gains.

Market participants now look forward to the US economic docket, featuring the release of the flash version of Manufacturing and Services PMI prints for August. The data might influence the USD price dynamics, which along with the broader market mood might produce some trading opportunities.

Technical levels to watch