Gold Price Forecast: XAU/USD plunges below $1700 after upbeat US NFP, next CPI

Gold price dropped after the US Labor Department reported employment figures, which exceeded estimations, justifying the Fed’s need for further tightening, bolstering the greenback. Therefore, XAU/USD is trading at around $1690, below its opening price.

Before the US Nonfarm Payrolls report was released, the yellow metal meandered around $1710. However, once the headline crossed newswires, gold’s initial reaction slid towards the $1700 region, but the initial move dissipated. Nevertheless, at the time of typing, it extended its losses below $1700 in a volatile reaction.

US Data reported by the US Bureau of Labor Statistics (BLS), showed that the US economy added 263K new jobs, smashing estimations of 250K, while the Unemployment Rate ticked lower to 3.5%, from 3.7% expectations. Even though it is a lower reading than August’s figures, it was above estimates, which would further cement the case for e Federal Reserve rate hike.

In the meantime, money market futures have priced in a 92% chance of a Fed 75 bps rate hake, up from 85.5%, before the US Nonfarm Payrolls report.

US Treasury bond yields pushed to the upside, with the US 10-year Treasury bond yield advancing three bps, at 3.865%, while the US Dollar Index, a gauge of the buck’s value vs. six currencies, is up 0.28%, at 112.565.

What to watch

Now that the US Nonfarm Payrolls report is on the rearview mirror, the next important events in the US calendar would be September CPI figures and the University of Michigan Consumer Sentiment in the next week.

Gold 5-minute Chart

Gold Key Technical Levels