Gold experienced a highly volatile session yesterday, falling close to the psychological support level of $3,300/oz before recovering toward the end of the session.
At the time of writing, gold is trading steadily around $3,330/oz, reflecting a tug-of-war between short-term profit-taking pressure and safe-haven demand amid lingering global economic uncertainties.
The recent pullback mainly stemmed from last week’s U.S. labour market data. Specifically, the Non-Farm Payrolls (NFP) report showed that the U.S. economy added 147,000 jobs, surpassing the forecast of 111,000, while the unemployment rate edged down to 4.1%.
Although the figures point to a labour market that remains resilient, average hourly earnings rose only 0.2%, below expectations, indicating that inflationary pressure remains subdued. This has eased concerns that the Federal Reserve will maintain a hawkish stance, and is not yet sufficient to trigger a trend reversal in gold. Instead, the price action appears to reflect a technical correction within a broader supportive context.
From a macroeconomic perspective, expectations of monetary policy easing continue to be a key driver supporting gold. The upcoming FOMC Meeting Minutes (July 10) and speeches from Fed officials may offer further clues regarding the timeline for rate cuts. Investors are still pricing in at least one rate cut this year, particularly as signs of slowing growth and consumption persist.
Beyond interest rate dynamics, geopolitical and trade risks have resurfaced following former President Donald Trump’s announcement of a series of tariff letters targeting a broad group of countries, including Japan, South Korea, and several Southeast Asian nations.
While the move was assertive, Trump left the door open for negotiations by extending the tariff implementation deadline to August 1. Nevertheless, fears of a renewed global trade war are weighing on market sentiment and boosting demand for safe-haven assets like gold.
All things considered, while short-term correction pressures remain as gold approaches key technical resistance levels, the underlying trend in the short term remains supported, driven by the combination of easing policy expectations and rising geopolitical risks. As long as gold maintains a foothold above the critical $3,300/oz level, the outlook for a continued rebound remains favourable.
By Linh Tran, Market Analyst at XS.com
