Gold retreats to the lower end of 6-day old trading range

Gold drifted lower through early European session on Thursday and has now dropped to session lows near $1285 level, eroding all of the previous session's gains.

Today's downfall could be attributed to a modest US Dollar recovery, which pared some of the losses led by the US President Donald Trump's threat for a government shutdown and warning of a possible termination of the North American Free Trade Agreement. A strong greenback tends to weigh on dollar-denominated commodities - like gold. 

Adding to this, a slight improvement in investors' risk appetite, as depicted by a mildly positive trading sentiment around European equity markets, further dented demand for traditional safe-haven assets and collaborated to the offered tone surrounding the precious metal. 

Meanwhile, the yellow metal had a good two-way business so far this week and oscillated within a familiar tight trading range over the past six trading sessions amid lack of catalysts, with bulls still struggling to catch hold of the key $1300 psychological mark. 

The market focus would remain on the Fed Chair Janet Yellen's speech at the Jackson Hole Symposium, which hints over the central bank's near-term monetary policy outlook would help determine the next leg of directional move for the non-yielding metal.

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Technical levels to watch

A follow through pull-back is likely to find support near $1280 level, below which the metal is likely to drift back towards retesting $1274-73 strong horizontal support. On the upside, $1290 level remains immediate strong support, which if cleared could lift the commodity towards $1294-95 resistance before eventually darting towards conquering the $1300 handle.