Gold slumps to $ 1200 on increased June Fed hike bets

Gold prolongs its downward trajectory into the NFP week, kick-starting Monday on an extremely bearish note as Yellen’s hawkish comments delivered last Friday continue to weigh.

Gold: $ 1200 mark tested

Currently, gold sinks -0.85% to 1202, bouncing-off slightly from a brief dip below 1200 levels. The bullion dived deeper in the red and hit fresh two-month lows after the US dollar rose sharply against the Japanese yen, with the USD bulls still riding higher on Fed Yellen’s comments, citing, the Fed should raise interest rates "in the coming months" if the economy picks up as expected and jobs continue to be generated.

In another evidence of diminishing investors’ confidence in the precious metal, Hedge funds and money managers cut their bullish bets in the gold futures and options to their lowest in almost two months.

In the week ahead, gold prices may remain undermined as the upcoming ECB policy decision is expected to bring divergent monetary policy stance to the fore and hence, will bolster USD further at the expense of gold. Meanwhile, the US dollar index gains +0.17% to 95.8, fresh tw0-month tops.

Markets now await the US labour market report due out on Friday for fresh hints on the Fed’s rate hike prospects. While the sentiment surrounding the global equities and the USD moves are likely to drive gold prices today amid holiday-thinned markets.

Gold Technical Levels                                   

The metal has an immediate resistance at 1210 (Round number) and 1217 (5 & 100-DMA). Meanwhile, the support stands at 1200 (key support) below which doors could open for 1190 (psychological levels).