Gold Price Analysis: XAU/USD hangs near 1-week lows, around $1860 region

• A goodish pickup in the USD demand exerted some follow-through pressure on gold.
• A softer risk tone, dovish Fed expectations extended some support to the commodity.

Gold remained depressed through the mid-European session, albeit has managed to pare some of its early losses to over one-week lows. The precious metal was last seen trading around the $1860 region, down around 0.75% for the day.

The commodity extended this week's rejection slide from the vicinity of the $1900 round-figure mark and witnessed some follow-through selling for the third consecutive session on Thursday. The downfall was sponsored by a goodish pickup in the US dollar demand, which tends to undermine demand for dollar-denominated commodities, including gold.

However, a combination of factors held traders from placing aggressive bearish bets. Despite the optimism about potential COVID-19 vaccine, concerns about the economic fallout from the continuous surge in new cases weighed on investors' sentiment. This was evident from a weaker tone around the equity markets, which, in turn, underpinned the safe-haven commodity.

Meanwhile, the market now seemed to have started pricing in the possibility of further monetary easing by the Fed. This was reinforced by a fresh leg down in the US Treasury bond yields, which extended some additional support to the non-yielding yellow metal and helped limit deeper losses for the XAU/USD, at least for the time being.

Moving ahead, market participants now look forward to the US economic docket, featuring the releases of Philly Fed Manufacturing Index and Initial Weekly Jobless Claims. This, along with the USD price dynamics and the broader market risk sentiment, should further assist traders to grab some short-term opportunities.

Technical levels to watch