Gold slides on soaring T-yields after Fitch’s downgrades US debt

Gold has dropped for the second consecutive day as US bond yields rise, boosting the US Dollar. Fitch’s downgrade of US Government debt from AAA to AA+ has sparked risk aversion and impacted market sentiment, leading investors towards safety in the US Dollar and Japanese Yen.

The ADP National Employment report showed private hiring grew by 324K, exceeding estimates, ahead of Friday’s crucial Nonfarm Payrolls data. The Gold Index is trading at $1,935.80, down 0.73%.

Wall Street remains depressed following Fitch’s downgrading of US debt, but US Treasury bond yields rose, led by the US 10-year benchmark note rate at 4.067%. The ISM Manufacturing PMI reached recessionary territory for the ninth straight month, but the trend appears to slow down.

The US Dollar advances 0.54% at 102.514, prolonging gains for six straight days. Gold experienced a higher high on Friday at $1,987.42, but the Gold Index retraced back below the $1,950 area, extending losses.

Technically, the precious metal dropped under the 100-day EMA, opening the door for further downside. However, the emergence of a ‘bullish flag’ can pave the way for further upside, with prices edging toward $2,000.