Gold plummets to one-month low post-ADP

Gold extended its bearish slide further below the 100-day SMA immediate important support and dropped to one-month low after the US private sector employment report.

Currently trading around $1210 region, the selling pressure around the precious metal intensified after the ADP reported private sector employment increased by 298K. The headline number was much-better-than the most optimistic estimates and prolonged the sell-off in US treasuries, lifting bond yields across all maturities sharply higher. This coupled with growing consensus for an eventual March Fed rate-hike action continued driving flows away from the non-yielding precious metal.

Meanwhile, a slight improvement in the investors' risk-appetite, as depicted by a recovery in equity market, further dented the yellow metal's safe-haven demand and collaborated towards accelerating the slide further below the 100-day SMA support near $1212 region.

Meanwhile, investors will remain focused on the key event risks - NFP release on Friday, ahead of next week's FOMC meeting, before committing to the commodity's near-term directional move.

Technical outlook

Carol Harmer, Founder at charmertradingacademy.com notes, "We see Gold coming to 1204 now...we lose this the chances are we take out 1199/1197..This done we look for 1180 as the first viable target...Now if we hold the 1208/1204 support we have a good change of trading back above 1218 and this should send us on our way to 1226 then possibly 1236....1236 will be a sticking point..."