Bengaluru — Gold fell on Friday, retreating from more than two-month highs hit in the previous session, as global equity markets recovered some poise from dramatic losses.

Spot gold was down 0.3% at $1,220.17 an ounce, by 10.03am GMT, after jumping about 2.5% on Thursday as a selloff in equities sent investors towards safe-haven assets. Prices hit their highest since July 31 at $1,226.27 on Thursday.

Gold has risen about 1.5% this week, on track for its biggest weekly gain in seven. “The markets have kind of stabilised and things have calmed down a bit and the sort of momentum for gold to push higher is not with us at the moment,” said Macquarie commodity strategist Matthew Turner.

Global shares were having their strongest day in nearly a month on Friday as European and Asian markets recovered from a brutal selloff that left them set for their worst week since February.

Despite gold’s sharpest one-day percentage gain since June 2016 on Thursday, the precious metal is still down about 11% from a peak in April as investors bought dollars as the US-China trade war unfolded against a backdrop of rising US interest rates.

“We could see some bounce like this as the futures market is extremely short. But, ultimately prices are going to drift down as the US Federal Reserve is still tightening and rates are going up, while the dollar is still firm. The fundamentals for gold are still weak,” Turner said.

Thursday’s surge helped bullion break above a narrow trading range it has been stuck in for the past one-and-a-half months.

“We need to wait to see how the stock markets are performing later in the day,” said MKS head of trading Afshin Nabavi.  “Breakout for gold on Thursday was around $1,207 to $1,212 and if prices break down to that level again, it would be a good entry point for gold.”

Spot gold may extend its gains to $1,237 an ounce, as suggested by a Fibonacci ratio analysis, according to Reuters technical analyst Wang Tao.

“Gold is trading fairly close to the 100-day moving average at $1,228. There should be plenty of resistance but a close above that level could signal a move higher,” MKS PAMP Group traders said in a note.

Meanwhile, palladium was up 0.8% at $1,086, after hitting its highest since January 26 at $1,096.80 in the previous session.  Silver rose 0.3% to $14.60, while platinum was down 0.2% at $837.24.