Gold eases from weekly tops, down little around $1635 level

• A combination of factors exerted some downward pressure on gold.
• The downside remains cushioned amid a slump in the US bond yields.
• Investors now look forward to the US economic data for a fresh impetus.

Gold witnessed a modest pullback from weekly tops and dropped to fresh session lows, around the $1631 region during the early European session.

A combination of factors failed to assist the commodity to build on the previous day's strong positive move, marking the biggest single-day gains since June 2016 recorded in the wake of the Fed's surprise move to cut interest rates by 50bps.

The downside is likely to remain limited

A positive mood around equity markets undermined demand for traditional safe-haven assets, including gold. This coupled with a goodish pickup in the US dollar demand turned out to be the key factors exerting some pressure on the dollar-denominated commodity.

However, a relentless fall in the US Treasury bond yields, dragging the yield on the benchmark US 10-year government bond below the 1.0% handle, or fresh lows, might lend some support to the non-yielding yellow metal and help limit deeper losses.

Hence, it will be prudent to wait for some strong follow-through selling before traders again start positioning for any further near-term depreciating move. Moving ahead, investors now look forward to the US economic releases for a fresh impetus.

Wednesday's US economic docket highlights the release of the ADP report on private-sector employment. This will be followed by the ISM Non-Manufacturing PMI, which might produce some meaningful trading opportunities later during the early North-American session.

Technical levels to watch