On July 2nd, Wednesday, we observed that the US JOLTs job openings for May hit a two-year high, indicating continued tightness in the labor market. This provided the Federal Reserve with little reason to cut interest rates, and market expectations for a Fed rate hike continued to support a strong US dollar, which in turn pressured gold prices. Consequently, our trading advice suggested focusing on resistance levels at $4020 and then $4060, with support levels at $3960 and then $3900.
Looking at the subsequent price action, during the European session on Wednesday, gold found support at $3960 and then broke above the key $4000 level. After consolidating above this point, it continued to rise, reaching a daily high of $4115 during the US session before encountering resistance and pulling back to find support around $4028. At Thursday's open, gold oscillated higher, meeting resistance near $4080 and is currently trading around $4062. Overall, gold failed to extend its prior decline. Wednesday's dip and subsequent recovery alleviated some near-term downward pressure, though the subsequent pullback from highs indicates that selling pressure remains significant.
Wolfinance star analysts believe that after stabilizing from its decline on Wednesday, gold's rally of over $150 from the lows was primarily supported by three factors. First, disappointing US ADP employment data, with the actual figure of 98K falling short of both forecasts and prior readings, suggested the labor market might not be as robust as it appears, reducing the urgency for the Fed to hike rates quickly. Second, relatively dovish remarks from the Fed Chair, while acknowledging elevated inflation, also noted that inflation expectations have moderated and did not signal an imminent rate hike. Third, positive signals from US-Iran negotiations somewhat diminished gold's safe-haven appeal. However, after hitting a one-week high, the price retreated, showing strong overhead resistance. This is mainly because, following the Fed's hawkish pivot, market expectations for a rate hike this year have surged significantly. The US dollar holding near one-year highs has directly capped gold's rebound potential.
On the daily chart, after hitting a new six-month low, gold's price action has gradually stabilized, maintaining a low-level consolidation pattern. For support, focus on the intraday low near $4030, followed by the psychological $4000 level. A break below this would increase the risk of a further short-term decline, with the next key level being Wednesday's low of $3960. For resistance, watch the $4100 level, which aligns with the upper Bollinger Band on the 4-hour chart, followed by the daily chart's middle Bollinger Band around $4160. The 5-day moving average is showing a bullish crossover, the MACD indicator is nearing a golden cross, and both the KDJ and RSI indicators have formed golden crosses. These technical signals suggest that after finding a footing, gold has room for further corrective rebounds in the near term.
Intraday Gold Outlook: The weaker-than-expected US ADP data hints that the labor market may not be as strong as perceived. Concurrently, the Fed Chair's comments indicating that inflation risks have diminished have reduced the necessity for the Fed to raise rates swiftly. A short-term pullback in the US dollar is providing support for gold's rebound. A trading approach favoring range-bound movement is suggested. Key support levels to watch are $4030, followed by $4000 and $3960. Key resistance levels are $4100, followed by $4160.
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