Gold still down over 1% on the day currently
Gold was smashed lower in Asia Pacific trading, in a relatively quick drop from $1,750 to $1,677 as sellers continued the post-NFP momentum to this week.
There are a couple of reasons perhaps for the sudden move and maybe by putting things together, it can explain the sharp fall in gold earlier in the day.
The first being as mentioned, that selling momentum picked up after Friday’s strong US jobs report. Gold had been consolidating since mid-July prior to the key risk event before finding fresh momentum to firmly break away below $1,800.
The second reasoning is in part the timing of the move. It comes during a rather illiquid time, not to mention with a Japanese holiday, in the market (all things considered).
That could have exacerbated the flow-driven momentum, albeit briefly.
And the final reasoning is what we can see above, that being technically. Gold breached below support from the 29 June low near $1,750 and also key trendline support seen around $1,755, so that perhaps accelerated the downside break.
That said, gold did find support from the March lows closer to $1,677 for now.
While buyers managed to lean on that to trim losses to $1,738 ahead of European trading, gold continues to look vulnerable for the time being.
Getting back above the region of $1,750-55 will be a good first step in minimising the more bearish momentum in my view but keep below that and sellers are likely to try and put further pressure on gold in the sessions ahead.