Gold pares post-NFP losses, still in red below $1200 mark

Haresh Menghani FXStreet

• Upbeat US monthly jobs report boosts the USD and prompts some fresh selling.
• US bond yields surge on bumper wage growth data and exert additional pressure.
• Risk-off mood underpinning safe-haven demand and helped limit further downside.

Gold finally broke down of its European session consolidation phase and fell to a session low level of $1193.48 in reaction to upbeat US monthly jobs report.

The US Dollar reversed an early dip to one-week low and caught some strong bids on the back of upbeat headline NFP print and eventually prompted some fresh selling around the dollar-denominated commodity.

Adding to this, average earnings recorded the biggest annual pace of growth since 2009 and reinforced prospects for a September Fed rate hike, with a further increase in December. The US Treasury bond yields rallied across the board, with the 10-year benchmark yield rising to 2.924%, up 1.64% for the day, and exerted additional downward pressure on the non-yielding yellow metal.

The downside, however, seemed cushioned, at least for the time being, amid the prevalent risk-off mood led by anxiousness over the proposed new US tariffs on around $200 billion worth of Chinese goods, which was seen underpinning the precious metal's safe-haven demand.

Technical levels to watch

Any subsequent weakness is likely to find support near the $1190 region (weekly lows), below which the slide could further get extended towards $1185-84 horizontal support. On the flip side, a sustained move beyond the key $1200 psychological mark could lift the commodity back towards $1208-09 supply zone ahead of the $1213-14 horizontal hurdle.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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