Gold rebounds modestly, trades near $1280

• Gold drops to multi-week lows on Monday.
• US Dollar Index clings to small gains above 96.
• Market sentiment doesn’t provide any directional clues.

Following a drop to its lowest level since late December at $1276, the XAU/USD pair staged a modest recovery in the last hour and was last seen trading near $1280, where it was down $0.8, or 0.06% on a daily basis.

Since failing to rise above the critical $1300 mark earlier this month, the XAU/USD pair has been moving up and down in a consolidation channel with the $1275 handle forming a strong base. Although today’s GDP data from China confirmed the economic slowdown in the world’s second-biggest economy, a higher-than-expected growth in industrial production helped ease concerns and didn’t allow markets to start the week in a dismal mood.

Meanwhile, with the U.S. bond and stock markets remaining closed due to the Martin Luther King Jr. Day holiday on Monday, the greenback stays relatively quiet and sits comfortably above the 96 mark, keeping the modest bearish pressure on the pair alive. As of writing, the DXY was clinging to small gains at 96.39.

Key technical levels