Gold Price Forecast: XAU/USD plummets to $1,765 area amid rising bets for faster Fed rate hikes

• Gold witnesses aggressive selling and tumbles to the daily low amid the post-NFP strong USD buying.
• The upbeat report lifts bets for a 75 bps Fed rate hike in September, which further weighs on the metal.
• The risk-off impulse could offer some support to the safe-haven XAU/USD and help limit further losses.

Gold comes under intense selling pressure during the early North American session and plummets to a fresh daily low, around the $1,765 area in the last hour.

The US dollar strengthens across the board on a stronger-than-expected employment report and turns out to be a key factor weighing heavily on the dollar-denominated gold. The headline NFP print showed that the US economy added a whopping 528K jobs in July, smashing expectations by a huge margin. Furthermore, the previous month's reading was also revised higher to 398K from the 372K, while the unemployment rate also surprisingly edged down to 3.5% from 3.6% in June.

The upbeat macro data lifts market bets for a larger Fed rate hike move at the September meeting, which further contributes to driving flows away from the non-yielding yellow metal. The odds of a 75 bps hike jump to 70% from 40% before the jobs report and trigger a sharp spike in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond climbs back closer to the weekly high and exerts additional downward pressure on gold.

The prospects for more aggressive policy tightening by the Fed, meanwhile, tempered investors' appetite for riskier assets. This is evident from a fresh leg down in the equity markets, which could lend some support to the safe-haven gold and help limit any deeper losses, at least for the time being. Hence, any subsequent downfall is more likely to find decent support near the weekly low, around the $1,754 area, which coincides with a strong hurdle cleared last week.

Technical levels to watch