Gold prices extended their gains early Friday in the Asian session, touching a high near $4195 and currently trading around $4180. Spot gold surged over 2% on Thursday, reclaiming the $4100 level and hitting a peak above $4143, its highest in over a week. Disappointing US non-farm payroll figures significantly dampened investor expectations for Federal Reserve rate hikes this year, pressuring the US dollar lower. Combined with geopolitical uncertainties and central bank gold-buying demand, this has injected strong upward momentum into the precious metal.
Key Market Drivers
The primary catalyst for gold's sharp rally was the much weaker-than-expected US June jobs report. Data from the Labor Department showed the economy added just 57,000 new jobs last month, only half of the 110,000 economists had forecast. More concerningly, employment figures for April and May were revised down significantly by a combined 74,000, indicating a cooling labor market that is more severe than previously thought. The US unemployment rate fell to 4.2% in June, the lowest level since June 2025 and below the market consensus of 4.3%. Following the data, gold and silver prices surged while the US dollar index retreated. Today, US markets are closed for the Independence Day holiday.
Regarding Middle East tensions: 1) Sources indicate the next round of US-Iran talks is scheduled for July 18. 2) Former President Trump stated he believes Iran has agreed to almost everything required. 3) Saudi crude oil exports are nearing pre-conflict levels, with analysts suggesting they may be overvalued. 4) It is reported that major European nations now believe imposing tolls on the Strait of Hormuz is inevitable.
According to the CME FedWatch Tool, the probability of the Fed holding rates steady in July is 82.4%, with a 17.6% chance of a 25-basis-point hike. For September, the odds of no change are 46.8%, a 25-bp hike is 45.6%, and a 50-bp hike is 7.6%. By December, the probability of no change is 23.5%, a 25-bp hike is 42.2%, and at least a 50-bp hike is 34.3%.
Technical Perspective
From a daily chart perspective, gold's bullish close above the 5- and 10-day moving averages near 4090 yesterday was technically justified, driven by the jobs data. Its rhythm remains highly inversely correlated with the US dollar index. However, gold's early Asian session break above the 20-day moving average near 4160 appears somewhat out of sync with the dollar's movement. Given the US market holiday today, such a move during the Asian session reflects underlying market instability. While gold has breached the 20-day MA, the special circumstances of the day make a sustained, forceful rally unlikely; it is more probable to see choppy, consolidative trading around this level. Therefore, avoid chasing the early rally and instead expect range-bound consolidation. On the upside, watch resistance near the 4200 psychological level and the previous minor high around 4220. Support is seen near the 5- and 10-day MAs around 4090. Once the market fully digests the fundamental news, gold's direction is likely to revert to moving inversely in sync with the dollar's rhythm.
Hourly Chart Analysis
Looking at the hourly chart, the overnight rally stalling in the 4140-60 zone was entirely within expectations. However, this morning's renewed push higher appears anomalous. Technically, this surge has created overbought signals on the hourly chart, so excessive optimism is unwarranted. Instead, be wary of a potential corrective pullback. Immediate resistance is seen near the hourly trendline and the 4190-4200 area. A break above could target the previous minor high around 4220, though such a breakout seems unlikely. With US markets closed, a scenario of prices rising then falling back is possible. On the downside, initial support is near last night's high around 4145, with a break below targeting the 4110-4100 zone.
Today's Trading Strategy
For short positions: If prices retest the 4190-4200 area, consider a light short position. An additional small short could be added near 4210-15. Set a manual stop-loss above 4220. Initial profit targets are 4160-50 for partial position reduction, with the remainder targeting 4110-00.
Long positions are not currently advised. If today's close is above the 20-day MA (4160), then look for a pullback next week as a potential opportunity for a short-term long trade.
Comments