Gold drops to fresh 2-month lows on firming Fed rate hike expectations
Gold faded dismal headline NFP-led spike to $1272 region and tumbled to fresh two-month low level of $1264.
The precious metal spiked after the latest US monthly jobs report showed the number of employed people declined, for the first time in 7-years, by 33K during the month of September. Investors, however, quickly realized that weaker headline numbers were primarily led by disruptions caused by Hurricanes - Harvey and Irma.
Meanwhile, the finer details of the report, showing an unexpected drop in the unemployment rate and stronger average hourly wage growth, reaffirmed that the Fed would eventually move towards raising interest for the third time this year.
• US: Payrolls distorted, but strong wages boosts case for Dec rate hike - ING
The same is evident from a sharp upsurge in the US Treasury bond yields, which provided an additional boost to the already stronger US Dollar and was eventually seen weighing heavily on the non-yielding/dollar-denominated yellow metal.
Technical levels to watch
A follow through weakness below $1260 level is likely to accelerate the slide towards $1254 intermediate support before the metal eventually drops to the $1250 region.
On the flip side, $1267 level now becomes immediate resistance and any recovery attempts beyond the mentioned hurdle might now be capped at 100-day SMA, currently near the $1273 region.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
