Gold stays quiet near $1270 ahead of US PMI data

• US Dollar Index remains in red below mid-94s ahead of data.
• Risk appetite returns to markets on Friday.
• Gold looks to record weekly losses.

After making a strong recovery in the second half of the day on Thursday, the XAU/USD preserved its bullish momentum on Friday and advanced to $1271. However, the pair is now having a tough time extending its gains is now moving sideways near $1270, where it's up nearly $3, or 0.2%, on the day.

The broad-based selling pressure witnessed on the greenback seems to be the primary driver of the pair's rise today. The US Dollar Index, which failed to hold above the 95 mark after testing it during the first half of the week, lost its traction and turned negative on the week as it continued to edge lower toward the 94 mark. Ahead of the Markit PMI data from the United States, the index is down 0.3% at 94.25.

On the other hand, the risk-off mood seems to have lost its control over the market action with major equity indices in Europe making a strong rebound following yesterday's heavy losses. At the moment, Germany's DAX and the UK's FTSE 100 indexes are up 0.5% and 1.35% respectively. Boosted by the improved market sentiment, Wall Street could start the last day of the week on a positive note.

Despite today's modest rise, however, the pair remains on track to record losses for the second straight week. 

Technical levels to consider

On the upside, the pair could encounter the first resistance at 1276 (Jun. 20 high) ahead of $1289 (20-DMA) and $1300 (psychological level). Supports are located at  $1266 (daily low), 1252.50 (Dec. 18 low) and $1243 (Dec. 8 low). Meanwhile, the CCI indicator on the daily chart recently recovered a little above the -100 mark, suggesting that the bearish momentum is fading away.