Gold surges amid mixed US data and Fed’s Warsh remarks
- Gold’s upside is limited by Warsh's remarks on keeping price stability central.
- ADP misses expectations, signaling softer hiring ahead of Thursday’s NFP release.
- Risk-off flows lift bullion despite a firm US Dollar and yields.
Gold (XAU/USD) price advances nearly 2% on Wednesday amid a strong US Dollar and high US Treasury yields, as US economic data was mixed and the Federal Reserve (Fed) Chair Kevin Warsh reiterated the central bank’s commitment to price stability. The XAU/USD pair trades at $4,083, after bouncing off daily lows of $3,960.
XAU/USD rallies as mixed US data offsets Dollar strength
Risk-off sentiment is another driver pushing bullion prices higher. Fed Chair Kevin Warsh remained “hawkish” as he reiterated the central bank’s commitment to price stability, opposed inflation exceeding the 2% goal, and added that the labor market is stable.
At the time of writing, the US Dollar Index (DXY), which tracks the buck’s value against six peers, is up 0.18% at 101.35. US Treasury yields, which correlate inversely to Gold , remained unchanged, with the 10-year T-note yielding 4.465%.
US data was mixed as the June ADP Employment Change fell short of expectations at 98K, below May’s 122K and the forecast of 113K.
Earlier, the Challenger Job Cuts in June decreased by 53% from 97,006 to 45,849. The Challenger, Grey & Christmas chief revenue officer Andy Challenger explained that layoffs slowed in June due to seasonal factors, with employers announcing 443,604 job cuts, 40% less than the same period last year.
Recently, the Institute for Supply Management (ISM) announced that the Manufacturing PMI dropped to 53.3 in June, down from May's level and below analysts’ expectations of 54. The positive is that the Prices Paid Index, which tracks inflation in the sector, fell to 73 from 82.1.
The geopolitical risk premium attributed to Gold eased somewhat following the signing of the Memorandum of Understanding (MOU) between the US and Iran. Recent developments indicate progress in negotiations, with talks resuming in Doha, Qatar, focusing on the management of the Strait of Hormuz and the terms of the 60-day MOU for talks on Iran's nuclear program.
What’s next in the economic calendar
Attention turns to US Nonfarm Payrolls data on Thursday, with expectations that the US economy will increase its workforce by 110K. Meanwhile, the Unemployment Rate is forecasted to stay unchanged at 4.3%.
XAU/USD technical outlook: Gold remains bearish below $4,100
Gold remains neutral-biased but slightly tilted downward, as evidenced by a series of lower highs and lower lows. Even though buyers emerged, driving XAU’s price above $4,100, the yellow metal recoiled, indicating that selling pressure lies overhead.
The Relative Strength Index (RSI) shows overall bearish momentum but indicates that short-term selling pressure is easing, as evidenced by its upward slope.
For a bullish reversal, Gold needs a daily close above $4,100. If reached, the next targets are the June 22 daily high at $4,220, followed by a resistance trendline around $4,280-$4,300. Breaking those levels could lead to a test of the 50-day Simple Moving Average (SMA) at $4,425
On the downside, initial support is the June 30 low of $3,941. Below, the next support levels are $3,900, followed by the October 28, 2025, swing low at $3,886. Further weakness could see prices dropping to $3,500, the daily high from April 22, 2025, which now acts as support.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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