Gold off lows, still in the red around $1720 ahead of US macro data

• A strong pickup in the USD demand exerted some intraday selling pressure on gold.
• Reviving safe-haven demand, amid sliding equity markets, extended some support.
• Investors now look forward to the US economic data for a fresh trading impetus.

Gold held on to its weaker tone through the mid-European session, albeit has managed to recover a part of its early lost ground to the $1708-07 region.

A strong pickup in the US dollar demand exerted some intraday downward pressure and dragged the dollar-denominated commodity away from multi-year tops, around the $1747-48 region set in the previous session.

However, a fresh wave of the global risk-aversion trade, as depicted by a sea of red across the equity markets, underpinned the precious metal's safe-haven demand and helped limit deeper losses, rather attracted some dip-buying.

The global risk sentiment took a knock after the International Monetary Fund on Tuesday said that the COVID-19 pandemic could cause the world economy to shrink by 3% in 2020, the biggest collapse since the Great Depression.

The latest development comes amid expectations of a prolonged period of low/negative interest rates and aggressive fiscal stimulus measures by governments extend some additional support to the non-yielding yellow metal.

Investors now seemed reluctant to place any aggressive bets and wait for the US economic releases to assess the economic damage caused by the COVID-19-induced lockdowns, which should produce some meaningful trading opportunities.

Technical levels to watch