Gold drops to multi-day low, below $1195 amid stronger USD

   “¢   Resurgent USD demand prompts some aggressive selling on Monday.
   “¢   Firming Fed rate hike expectations exert additional downward pressure.
   “¢   The prevalent risk-off mood does little to stall the ongoing downfall.

Gold came under some renewed selling pressure at the start of a new trading week and dropped to a multi-day low level of $1193 in the last hour.

On Sunday, the PBoC decided to loosen monetary policy and lower the required reserve ratio (RRR) for some lenders by 1%. The move comes amid signs of mounting economic growth pressure and escalating trade disputes with the US.  

This coupled with a positive assessment of the latest US monthly employment details helped the US Dollar to regain strong positive traction at the start of a new trading week and was seen as one of the key factors prompting some aggressive selling around the dollar-denominated commodity.

Meanwhile, a larger than expected fall in the US unemployment rate to the lowest level since 1969, and mostly in-line wage growth data reinforced expectations that the Fed might continue raising interest rates, which further collaborated towards driving flows away from the non-yielding yellow metal.  

The bearish trajectory seemed rather unaffected by a fresh wave of global risk-aversion trade, as depicted by a sea of red across equity markets and which tends to underpin demand for traditional safe-haven assets.  

The US markets will remain close in observance of Columbus Day and hence, the USD price dynamics might continue to act as an exclusive driver of the precious metal’s momentum through Monday’s trading session.

Technical levels to watch

Immediate support is pegged near $1188 area, below which the commodity is likely to accelerate the slide further towards $1182-80 support area. On the flip side, any recovery above $1197 level is likely to confront fresh supply near the key $1200 psychological mark and is closely followed by a stiff resistance near the $1203-04 region.