By Barani Krishnan

Investing.com – Gold tumbled to two-month lows on Tuesday, taking a new crack at mid-$1,700 lows as the dollar rebounded, before late buying support rescued longs in the yellow metal from deeper losses.

on New York’s Comex settled at $1,763.60, down $17.10, or 1%. It earlier plumbed $1,750.20, its lowest since April 15.

The hovered at $1,765.15 by 2:45 PM ET (18:45 GMT), after a two-month low at 1,750.83.

Traders and fund managers sometimes decide on the direction for gold by looking at the spot price — which reflects bullion for prompt delivery — instead of futures.

Gold reached new weakness this week as the paused its recent slide, advancing by 0.2% Tuesday to steady above the psychologically-important 92 level.

“A stronger dollar and expectations that the Fed is moving towards tightening monetary policy has dragged on the precious metal,” said Sophie Griffiths, head of U.K. and EMEA research for online broker OANDA.

The Fed signaled at its June policy meeting two weeks ago that it will likely opt before the end of 2023 for two hikes in interest rates, which the central bank has kept between zero and 0.25% since the outbreak of the coronavirus pandemic in March 2020. The Fed’s so-called dot-plot projections showed that following the two hikes, rates could be at 0.6%.

Since the mid-June meeting, Fed officials have also been issuing mixed messaging on when they were likely to pull in the $120 billion of monthly asset purchases carried out by the central bank to support the economy.

The combination of ultra low rates and heavy infusion of Fed funds into the economy had basically juiced markets, including gold, through the height of the pandemic. U.S. markets have been jittery of late on any prospect of Fed tapering of these supportive measures, with gold being the worst hit of the lot and stocks being the most insulated.

This week, investors will be on the lookout for the U.S. non-farm payrolls report for June, due on Friday, for clues on what the Fed might do next. Economists tracked by Investing.com have forecast a growth of 690,000 jobs in June to add to May’s expansion of 559,000.

The United States lost more than 21 million jobs between March and April 2020, at the height of business lockdowns forced by the coronavirus. About 8 million of those jobs have yet to return, officials say.

The Fed has forecast a 6.5% economic growth for all of 2021 although Jerome Powell, chairman of the central bank, says he does not expect “full employment” — defined by a monthly unemployment rate of 4.0% or lower — to occur anytime soon. The monthly unemployment rate stood at 5.8% in May.

“We are unlikely to see any big moves … until Friday’s non-farm payroll numbers,” Griffiths said, referring to gold.