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Gold tests $1700 support ahead of NFP

As mentioned last week, gold prices indeed moved lower following Fed Chair Powell’s hawkish message at Jackson Hole last Friday.

Since then, markets duly raised their expectations for a 75-basis point hike by the Fed later this month while forecasting a higher peak in this ongoing rate hike cycle.

Spot gold is now testing the psychologically-important $1700 mark for support ahead of the keenly awaited US August jobs report.

Gold tests $1700 support ahead of NFP

Markets are forecasting a headline nonfarm payrolls figure of just-under 300,000 (298k), while the unemployment rate is expected to remain at its pre-pandemic low of 3.5%.

Further signs of robust hiring in the US jobs market may embolden the Fed to press on with its aggressive battle against inflation, with such a narrative in turn heaping more downward pressure on spot gold.

At least bullion bugs can take heart from the fact that dips into sub-$1700 territory in recent years have proven short-lived, suggesting that gold may not have much further left to fall over the immediate term.

 

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