Gold closer to 10-month low ahead of key NFP data

Gold reversed early tepid recovery gains to $1178 and has now dropped to the lower end of daily trading range amid broad based US Dollar recovery.

Currently trading around $1172 region, resurgent greenback buying interest is seen weighing on dollar-denominated commodities - like gold. Moreover, the Federal Reserve is widely expected to certainly raise interest rates at its next monetary policy meeting on December 13-14, which eventually is denting demand for non-yielding precious metal.

Moreover, following US presidential election, growing expectations of aggressive fiscal spending by Trump administrations is expected to spur growth and inflation, which is fueling speculations of more rate hikes from the Fed in 2017 and is also weighing on the yellow metal. The metal eventually dropped to its lowest level since February on Thursday. 

With the movement in gold highly correlated with the US Dollar, investors on Friday will have a close look at the US monthly jobs report in order to evaluate possibilities and timing of next Fed rate-hike action, beyond December meeting. 

Technical outlook

Carol Harmer, Founder at charmertradingacademy.com, notes, "there is a strong chance that we will fail on any rally and move lower overall towards key 1080 area..... Now if 1160 does yield first stop I think will be 1124/22 possibly 1115....."

She further add, "We know resistance short term is at 1199...unless we clear some critical topside levels the market is in sell Gold mode....rallies currently look to be short lived and we would envisage the market selling off from these higher levels...shorts to have stops placed above 1205...."

"we are shoing no real sign that Gold is back on the Christmas Card list...  and it will not be unless something drastic happens to it and it roars above 1235..."