Gold Lower on Monday

Gold prices are lower on Monday, failing to benefit from the sell off in USD on the back of Friday’s US jobs data. Despite the drift lower in USD, Fed tightening expectations have risen on the back of the data, informing the current price action in gold. With the headline NFP print of 100k almost double the 55k Wall Street was looking for, market pricing for a September hike is now back up to 60% from around 50% ahead of the data.

US Inflation On Watch

The lift is perhaps a little less than expected, suggesting that the bigger focus is on Friday’s incoming US inflation data. With that in mind, gold prices could be on the verge of a much heavier sell off if Friday’s data comes in strong and September rate hike pricing jumps accordingly. On the other hand, if Friday’s headline CPI print comes in below the 3.4% level expected, this could see rate hike expectations for this month falling back below the 50% level with gold prices set to rally there as USD comes off. Given that we’ve recently seen a hawkish shift in traders projections, a disappointment in Friday’s data would likely fuel the biggest move.

Technical Views

Gold

Gold prices are holding the 4,389.24 support level for now with 4,558.62 the next challenge while that level holds. If we do break higher again, 4,871.47 will be the higher bull target to watch while to the downside, 4,204.01 will be the key support level to watch.