Gold rebounds above $1560 ahead of US PMI data

• 10-year US Treasury bond yield erased 1% on Friday.
• US Dollar Index stays in the positive territory near 97.80.
• Coming up: Markit Services and Manufacturing PMI data from US.

The XAU/USD pair dropped to a daily low of $1556.70 during the European trading hours as the easing worries over coronavirus becoming a global epidemic and a broad-based USD strength put the pair under bearish pressure.

Risk sentiment drives gold's action

The World Health Organisation's (WHO) said coronavirus had not yet become a global health emergency and noted that it was too early to draw conclusions on its severity to help market sentiment improve.

However, the 10-year US Treasury bond yield, which spent a large portion of the day in the positive territory, lost its traction in the last hour and was last down 1% to suggest that investors are not yet eager to move away from safe-haven assets. With risk-off flows picking up steam in the early trading hours of the American session, the pair staged a rebound and was last seen trading at $1561, losing nearly $2 on the day.

In the meantime, the greenback is staying relatively strong with major European currencies struggling to find demand on Friday and making it difficult for the pair to make a decisive rally. Ahead of the preliminary Manufacturing and Services PMI data from the US, the US Dollar Index is up 0.15% on the day at 97.82.

Technical levels to watch for