Holding Post-NFP Gains For Now

Gold deals $2/oz softer to print ~$1,710/oz, backing away from Friday’s highs at typing amidst an uptick in the USD, with the DXY having briefly breached the 110.00 mark earlier in the session.

• To recap, gold closed ~$15/oz firmer on Friday, rallying on the above-expectations NFPs print before paring gains as wider worry re: the halt of gas to Europe through the Nord Stream pipeline drove a rebound in the Dollar (amidst weakness in the Euro).
• Friday’s rally was also insufficient to avert a third consecutive lower weekly close for gold amidst elevated worry re: Fed/ECB hawkishness, with total ETF holdings of gold recording a 12th straight weekly decline.
• Wider expectations for a 75bp rate hike in Sept have declined, with Sep FOMC dated OIS now pricing in ~64bp of tightening at that meeting (vs. ~68bp pre-NFPs), pointing to a ~55% chance of a 75bp move.
• From a technical perspective, gold remains in a clear short-term downtrend. Initial support is seen at $1,681.0 (Jul 21 low and bear trigger), while resistance is located at $1,726.6 (Aug 31 high).