Today, the bullion continues to experience pressure from the bears. A massive sell-off of gold futures began last Friday evening after the release of stronger-than-expected data from the US labor market.
At the end of the week, it became known that 943 thousand jobs were created in the United States in July, which significantly exceeded the forecast. According to economists, the indicator could reach 870 thousand.
At the same time, the unemployment rate fell to 5.4% compared to 5.9% in June. Also, positive changes affected wages, which grew more than expected.
Optimistic statistics indicate an economic recovery and hints at a more rapid curtailment of the Fed's stimulus measures, which is favorable for the dollar and the yield of US bonds.
On the background of encouraging data, the dollar index against its main six competitors rose by 0.61% last Friday, and the yield on 10-year bonds jumped from 1.21% to 1.30%.
Such dynamics undermined the demand for precious metals. Investors turned their backs on gold, as a result of which the value of the asset fell by 2.5%, or more than $45, last Friday. At the end of the session, the quotes were trading at $1,763.1.
Gold has also fallen in price following the results of the entire past seven-day period. Moreover, the current pullback turned out to be the most significant weekly drop in 2 months. The asset sank by 2.97%, while the US currency index, on the contrary, rose by 0.7%.
After Friday's drop in gold below the initial support of $1,790, many analysts said that it could test the main support at $1,690. But no one could have predicted that this target would be achieved so soon.
At the opening of Asian markets on Monday, the price of the main precious metal fell by almost $100. At one point, the asset fell to the lowest value since April 2020 at $1,677. However, it did not stay outside of $1,700 for long, starting to recover.
So, at the time of preparing the publication, gold was trading at $1,741. Compared to Friday's close, the quotes fell by $21.5, or 1.22%.
Despite the downward trend, some analysts believe that gold still retains growth potential. For example, the well-known trader Fred Hickey considers this situation as another wave of correction, which began after the asset reached record highs a year ago.
He notes that the previous attacks of futures traders have only benefited him. Other experienced market participants who prefer to invest in physical gold also agree with him.
Therefore, they consider the current pullback not a disaster, but a great opportunity for purchases. Moreover, the central banks of many countries are not in a hurry to tighten their monetary policy yet.
