- Gold jumped to near one-month tops in reaction to disappointing headline NFP print.
- Sustained USD selling bias and a turnaround in the risk sentiment remained supportive.
- A sharp spike in the US bond yields might keep a lid on any further gains for the metal.
- Gold analysis: Reveals triangle pattern
Gold caught some fresh bids during the early North American session and shot to near one-month tops, around the $1,830 region in reaction to disappointing headline NFP print. The US dollar weakened across the board after the closely-watched US monthly jobs report showed that the US economy added 235K new jobs in August. This was well below the previous month's upwardly revised reading of 1053K and missed expectations by a big margin.
Investors pushed back their expectations for the likely timing when the Fed will begin rolling back its massive pandemic-era stimulus. This, in turn, exerted some additional pressure on the already weaker US dollar and provided a goodish lift to dollar-denominated commodities, including gold.
Meanwhile, the data now seemed to have raised doubts about the US labour market recovery and fueled worries about the potential risks associated with the fast-spreading Delta variant of the coronavirus. This was evident from a weaker tone around equity markets, which further benefitted the safe-haven XAU/USD.
That said, a sharp spike in the US Treasury bond yields held bulls from placing aggressive bets and kept a lid on any further gains for the non-yielding gold. Additional details revealed that the unemployment rate fell in line with market expectations, to 5.2% from 5.4% in July. Moreover, stronger wage growth data seems to have kept hopes alive for an imminent taper announcement at the November FOMC meeting.
Even from a technical perspective, a sustained move beyond the $1,832-34 supply zone is needed to confirm a fresh bullish breakout. This makes it prudent to wait for a strong follow-through buying before positioning for a further near-term appreciating move. A convincing breakthrough the mentioned barrier has the potential to lift gold prices further towards the $1,852 region en-route the next major hurdle near the $1,868-70 zone.
Technical levels to watch
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