Gold price takes two massive hits, but fundaments remain strong ahead of FOMC meeting next week

A one-two punch has knocked gold down to the canvas, but although prices have room to move lower, analysts have said that investors should view this correction as a strategic buying opportunity.

Although gold continues to consolidate in a broad range, the precious metal is ending the week with massive volatility. Disappointing economic data helped push gold prices to initial resistance at $2,400 an ounce mid-week; however, that bullish momentum has proven unsustainable as the market ends Friday in solidly negative territory, extending its losing streak to three weeks.

August gold futures last traded at $2,325.60 an ounce, down more than 2% on the day. Meanwhile, the precious metal is down nearly 1% from last Friday.

Silver is also being dragged lower, extending its losing streak to three consecutive weeks. July silver futures last traded at $29.46 an ounce, down 6% on the day and down 3% for the week.

The selloff started early Friday after data from the People's Bank of China showed that the central bank did not buy gold last month, ending a record 18-month shopping spree. The disappointing news caused gold prices to drop by nearly $20.

While on the ropes, the market was hit with another $20 drop following more disappointing data. The U.S. economy created 272,000 jobs in May, significantly beating expectations. At the same time, wages increased by 0.4%, also beating expectations.

At first blush, the economic data prompted markets to once again shift their interest rate expectations and start pricing a potential rate cut in September off the table.

Although gold has suffered some significant blows, it is not down for the count.

Christopher Vecchio, Head Of Futures and Forex at Tastylive.com, said the employment numbers were not as healthy as the market thinks. He pointed out that there was a massive discrepancy between the government numbers and the household survey. The government numbers show robust gains; however, the household survey showed job losses of 408,000.