Gold trades with modest gains, holds steady above $1720 level

• Gold regains some positive traction on Thursday amid concerns over coronavirus crisis.
• Sustained USD buying, recovery in the global risk sentiment kept a lid on any further gains.

Gold edged higher during the early European session and is currently placed near the top end of its daily trading range, above the $1720 level.

Following the previous day’s modest pullback, the precious metal regained some positive traction on Thursday and was being supported by concerns that extended COVID-19-induced lockdowns could lead to a deeper economic slowdown.

The severity of the collapse in the economic activity was reinforced by Wednesday’s US macro releases, which showed that monthly retail sales plunged 8.7% in March and industrial production recorded the steepest decline since early 1946.

The data further reaffirmed the International Monetary Fund’s (IMF) pessimistic view that the coronavirus pandemic could cause the world economy to shrink by 3% in 2020 – the biggest collapse since the Great Depression.

This eventually underpinned the precious metal’s perceived safe-haven demand. However, sustained US dollar buying, combined with a recovery in the global risk sentiment might keep a lid on any strong gains for the dollar-denominated commodity.

Hence, it will be prudent to wait for some strong follow-through strength before traders again start positioning for any further near-term appreciating move. Thursday’s key focus will be on the US economic docket, highlighting the release of initial weekly jobless claims.

Technical levels to watch