Rising US yields hurt gold bulls ahead of NFP

Spot gold has been mired in the mid-$1900 range as the US dollar extended its recovery while surging US Treasury yields hurt demand for the zero-yielding precious metal.

The bond market has had to contend with the greater incoming wave of debt issuance by the US Treasury, which in turn has pushed yields higher, while Fitch Ratings had earlier this week stoked concerns about the US fiscal outlook.

Bullion has since been dragged to its lowest levels since mid-July, trading notably below its 50-day simple moving average (SMA).

Today’s (Friday, August 4^th) US jobs report would hold great sway over whether spot gold returns to the $1900-$1934 range it adhered to between June and July, or whether it can resurface above its 50-day SMA.

A stronger-than-expected US jobs report which underpins inflationary pressures and entices the Fed into one more rate hike should spell more near-term trouble for bullion bulls.

However, a significant softening of the US labour market that opens the door for a September pause by the Fed may help arrest the recent slump in spot gold.