• Gold price is expected to extend its weakness to near $1,700.00 on hawkish Fed bets.
• A decline in US ADP employment data failed to weaken the DXY.
• The US NFP is seen lower at 300k vs. 528k reported earlier.

Gold price (XAU/USD) has displayed a less-confident pullback after hitting a fresh monthly low of $1,709.67 in the late New York session. The precious metal is expected to decline further to near the psychological support of $1,700.00 as investors ignored the weaker employment generation numbers and are focusing on more restrictive monetary policy by the Federal Reserve (Fed).

Ahead of more comprehensive and considered US Nonfarm Payrolls (NFP) data, the unconventional US Automatic Data Processing (ADP) has reported 132k new job additions in August in the private sector, much lower than the expectations of 288k. Investors were already expecting a fall in employment generation as big tech boys announced a halt in recruitment or retrenchment at a conference call after the release of second-quarter results.

Going forward, the mega event of US NFP is expected to land at 300k lower than the prior release of 528k. Also, the Unemployment Rate is expected to remain unchanged at 3.5%. As bringing price stability is the foremost priority of the Fed, softening labor market is not able to change the conviction of Fed policymakers towards hiking interest rates.

Gold technical analysis

Gold prices are declining firmly towards the monthly lows placed at $1,680.91, recorded on July 21. The 20-and 50-period Exponential Moving Averages (EMAs) at $1,726.40 and $1,738.32 respectively are scaling towards the south, which adds to the downside filters.

Also, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates more weakness ahead.

Gold four-hour chart