Gold falls to a new monthly low below $1,720

• Gold was again under bearish pressure in the European session on Tuesday.
• The 10-year US Treasury bond yield is rising, weighing on XAU/USD.
• Dollar Index gains ground ahead of jobs data.

Having spent the Asian session fluctuating in a relatively tight channel above $1,720, gold turned south during European trading hours and fell to its lowest level in six weeks at the $1.17100 area.

Rising US yields and dollar strength weigh on gold

Renewed dollar strength amid sour market sentiment appears to weigh on XAU/USD on Wednesday. US stock index futures fell into negative territory in the European session, suggesting safe-haven flows are beginning to dominate market action. In turn, the Dollar Index rose above 109.00.

Meanwhile, the 10-year US Treasury bond yield is up almost 1% on the day to 3,138%, not allowing gold to shake off the bearish pressure.

Additionally, investors are increasingly concerned about the prospects for gold demand as China sticks to its zero-listing policy and imposes new restrictions in several cities.

In the second half of the day, ADP will report on private sector employment in August. Fed officials have repeatedly said they will evaluate the data before deciding the size of the September rate hike. CME Group’s FedWatch tool shows that markets are currently pricing in a 71.5% chance of a 75 basis point rate hike at the next FOMC meeting. Stronger-than-expected ADP data could allow the Fed’s hawkish bets to continue to boost the dollar’s valuation ahead of Friday’s expected Non-Farm Payrolls (NFP) report.

Market participants will also be paying close attention to how Wall Street’s major indices perform after the opening bell. Barring a noticeable improvement in risk sentiment, the dollar is likely to remain strong during the American session.

Gold Technical Levels