Gold drops to weekly lows and rebounds, keeps the red below $1640 level

• Gold edges lower despite a brutal selloff across global equity markets.
• Fed rate cut speculations, tumbling US bond yields failed to impress bulls.
• The downside is likely to remain limited amid persistent coronavirus fears.

Gold edged lower through the early European session on Friday and dropped to fresh weekly lows, around the $1620 region in the last hour.

Having failed to find acceptance above the $1650 region for two consecutive days, the precious metal witnessed some long-unwinding trade on Friday and retreated further from multi-year tops set earlier this week.

Bulls shrug off a combination of factors

The precious metal failed to benefit from a meltdown across the global equity markets – sparked by growing market concerns over the outbreak of the deadly coronavirus outside of China and its impact on the global economic outlook.

The ongoing slump in the US Treasury bond yields – further fueled by speculations that the Fed will cut interest rates sooner rather than later – also did little to impress bulls or provide any impetus to the non-yielding yellow metal.

In absence of any obvious fundamental catalyst, the downtick could be solely attributed to profit-taking amid might still attract some dip-buying amid growing worries that the viral outbreak has the potential to become a pandemic.

Technical levels to watch