- Gold witnessed some aggressive selling in reaction to upbeat NFP report.
- Surging US bond yields, stronger USD contributed to the bearish pressure.
- A break below 50-day SMA might have paved the way for a further slide.
Gold witnessed some aggressive selling during the early North American session and dived to fresh one-month lows, below $1685 level post-US jobs report.
The headline NFP report showed that the US economy unexpectedly added over 2.50 million jobs in May as compared to a loss of 8 million jobs anticipated. Adding to this, the unemployment rate edged lower to 13.3% during the reported month from 14.7% previous, beating consensus estimates of a rise to 19.8% by a big margin.
The data further fueled hopes for a sharp V-shaped recovery for the global economic recovery and reinforced expectations that the worst of the coronavirus pandemic was over. This, in turn, provided an additional boost to the already upbeat market mood and was seen as one of the key factors weighing heavily on the safe-haven precious metal.
The risk-on mood led to a sudden spike in the US Treasury bond yields, which added to the downward pressure on the non-yielding yellow metal. Meanwhile, the US dollar built on its goodish intraday bounce from the lowest level since mid-March and further collaborated towards driving flows away from the dollar-denominated commodity.
The steep intraday fall dragged the commodity below the 50-day SMA support near the $1690 region and might have already confirmed a near-term bearish breakdown. Hence, some follow-through weakness towards retesting early May swing lows, around the $1670 area, now seems a distinct possibility.
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