Gold plummets to 4-month low on USD strength, aims for $1200/oz

Following a modest recovery attempt in the early NA session to $1225 mark, the XAU/USD came under a heavy pressure and lost more than $10 to fall to its lowest level since early March at $1213. As of writing, the pair is trading at $1214.50, losing 0.9% on the day.

Although the market reaction to today's NFP report from the United States wasn't clear in the first hour, the greenback gradually built up its strength and pushed to a fresh session high at 95.93. At the moment, the US Dollar Index is at 95.90, up 0.33% on the day. Today's data showed that nonfarm payroll employment in June increased by 222,000, 70,000 more than May's 152,000. On the other hand, the unemployment rate ticked up to 4.4% and the labor force participation rate and average hourly earnings remained virtually unchanged.

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In the meantime, commodities remain under a constant selling pressure as the sharp drop seen in crude oil prices push investors away. After falling to $43.80, the barrel of West Texas Intermediate is now trading at $44.27, losing 2.8%, or $1.3, on the day.

Technical outlook

Also, despite a few attempts, the XAU/USD pair failed to make a daily close above the 200-DMA, suggesting that investors were not believing in a strong recovery. $1200 is a critical level for the pair, and the last time it was broken, in November, the pair lost more than $50. Below $1200, $1195 (Mar. 10 low) could be the first short-term support ahead of $1180 (Jan. 27 low). On the upside, $1225 (200-DMA), $1242 (20-DMA) and $1253 (50-DMA) are important dynamic resistances.