Our analysis suggests that weaker-than-expected non-farm payroll data may have temporarily alleviated market concerns about the Federal Reserve implementing further interest rate hikes, which could provide some support for gold prices. Additionally, demand for gold from official sector purchases continues to underpin the medium to long-term investment case for the precious metal.
Key Analysis
During the week of June 26 to July 3, 2026, U.S. non-farm payroll growth for June came in significantly below expectations, indicating a more pronounced cooling in the labor market. Data from the U.S. Department of Labor showed that non-farm payrolls increased by 57,000 in June, falling short of the Reuters survey forecast of 110,000. Furthermore, the previously reported figure for May was revised down from 172,000 to 129,000, and the combined job gains for April and May were revised down by 74,000 from the initial estimates. Structurally, private sector non-farm payrolls rose by 49,000 in June, while manufacturing employment increased by 3,000, showing no further significant deterioration. The slowdown and downward revisions bring the non-farm data more in line with other labor market indicators, such as small business hiring plans, potentially reflecting a gradual return of the U.S. job market to a state of "low hiring, low firing."
In the precious metals sector, both gold and silver prices recorded gains this week, with silver demonstrating relatively stronger momentum. As of July 3, 2026, the spot price of London gold stood at $4,174.19 per ounce, marking a weekly increase of 2.09%. The spot price of London silver was $62.36 per ounce, rising 5.45% for the week. Regarding futures, as of July 4, 2026, COMEX gold futures settled at $4,174.60 per ounce, up 2.35% on the week, while COMEX silver futures settled at $62.4 per ounce, gaining 5.42%.
We believe the weak non-farm data may have temporarily eased market fears of further Fed rate increases and could offer some support to gold prices. Concurrently, data from the World Gold Council indicates that global central banks added a net 41 tonnes to their official gold reserves in May 2026, a further recovery from the net purchases seen in April. The purchasing activity remains concentrated in emerging market economies, with Poland and China adding a net 18 tonnes and 10 tonnes, respectively, while Uzbekistan and Kazakhstan continued their monthly net purchases. Demand from official sector buyers continues to provide support for the long-term investment rationale for gold.
Historical analysis of monthly effects suggests that the performance of the Hang Seng Index can vary across different calendar months. Based on monthly returns since 2015, January, April, November, and December have shown relatively higher average returns of 2.14%, 2.26%, 2.48%, and 1.37%, respectively. Conversely, May, July, August, September, and October have recorded negative average returns of -1.45%, -0.57%, -1.55%, -0.63%, and -1.59%, with August and October showing particularly weak performance. In terms of the probability of positive returns, January and April have historically exhibited higher success rates. Since 2015, the Hang Seng Index has posted gains in January and April 75.0% of the time, ranking among the highest across all months. The probabilities for March and December are 58.3% and 54.5%, respectively, indicating a more neutral performance.
Entering July, the divergence in monthly effects between Hong Kong and U.S. stocks may become more pronounced. The Hang Seng Index has historically shown negative average returns from July through October: -0.57%, -1.55%, -0.63%, and -1.59%, respectively. In contrast, the S&P 500 has posted average gains of 1.52% in both July and October, with only August and September showing negative average returns of -0.23% and -0.59%. This indicates that while August and September have been historically weak in terms of average returns for both markets, the performance directions for July and October differ between Hong Kong and U.S. equities, highlighting a divergence in their respective monthly patterns. These historical conclusions should be interpreted with caution in light of prevailing market conditions.
Overview of Global Markets
Major global equity markets generally advanced this week, indicating a recovery in risk appetite. Amid a backdrop of easing external pressures, Germany's DAX index rose 4.49%, the Nasdaq Composite gained 2.12%, the Dow Jones Industrial Average increased 1.97%, the S&P 500 climbed 1.76%, the UK's FTSE 100 added 1.63%, France's CAC 40 rose 1.47%, and Japan's Nikkei 225 advanced 0.55%. Hong Kong stocks performed relatively strongly, with a notable recovery in the technology and growth sectors. The Hang Seng Tech Index surged 5.72% this week, leading gains among major indices. The Hang Seng Index rose 2.99%, also ranking near the top, suggesting a potential phase of recovery for the Hong Kong market following its recent adjustments.
The Hang Seng China AH Premium Index experienced limited volatility this week, rising slightly before retreating. As of July 3, 2026, the index closed at 123.30, up 0.43 points or approximately 0.35% from 122.87 on June 29. The AH premium remaining above 120 indicates that A-shares continue to trade at a premium relative to their H-share counterparts.
Risk Factors to Consider
Key risks include: 1) Overseas liquidity conditions improving less than anticipated; 2) Geopolitical tensions resurging, leading to energy price volatility and supply chain disruptions exceeding expectations; 3) A slower-than-expected recovery in overall market risk appetite.
Comments