Gold price inches higher as traders brace for critical US NFP data
- Gold up 0.29% as investors await Thursday’s pivotal Nonfarm Payrolls report.
- ADP signals stalled hiring; Microsoft to cut 9,000 jobs, fueling slowdown fears.
- Geopolitical tensions ease, but Trump’s tariff deadline keeps trade risks alive.
Gold price climbs cautiously during the North American session as traders brace for the release of the latest Nonfarm Payrolls (NFP) figures in the United States (US), which could be crucial for the path of interest rates set by the Federal Reserve (Fed). At the time of writing, XAU/USD trades at $3,348, up 0.29%.
The latest job reports, as revealed by ADP, showed companies halting hiring instead of letting people go as they adjust to the current economic environment. News that Microsoft is cutting 9,000 jobs paints a gloomy outlook for the labor market.
On Thursday, the US Bureau of Labor Statistics will release the latest employment report, which is expected to show that the economy added 110,000 Americans to the workforce, below the 139,000 added in May. The Unemployment Rate is forecasted to rise from 4.2% to 4.3%, still within the projections of 4.4% set by the Fed in its latest Summary of Economic Projections.
Geopolitical risks diminished sharply as news broke of a possible 60-day ceasefire in Israel’s incursion into Gaza. This, along with the truce agreement between Israel and Iran, capped Gold’s rally, with the yellow metal faltering in its attempt to reclaim the $3,400 mark.
Aside from this, traders’ focus shifted to trade deals between the US and its peers. With the July 9 deadline right around the corner, US President Trump said he won’t extend the deadline to resume higher tariffs.
This shortened week, ahead of the US Independence Day on July 4, will feature Initial Jobless Claims and the NFP on Thursday.
Daily digest market movers: Gold price climbs as US yields and US Dollar advanced
- Gold rally is set to remain, as data revealed by the World Gold Council said that central banks added 20 tonnes of the yellow metal in May, with Kazakhstan leading the way. The National Bank of Kazakhstan reported 7 tonnes, followed by the Central Bank of Turkey, which reported 6 tonnes, and the National Bank of Poland.
- Bullion edges higher even as US Treasury yields rise. The 10-year US Treasury note is yielding 4.296%, a five-basis-point increase. US real yields, which are calculated by subtracting inflation expectations from the nominal yield, are also moving up close to six basis points to 2.006%.
- The ADP Employment Change report for June showed that private companies decreased hiring by 33,000 in June, well below estimates of 95,000. The report showed that service providers reduced payrolls by 66,000 in June due to declines in professional and business services.
- The approval of US President Donald Trump's “One Big Beautiful Bill” is in doubt as House Republican hardliners are eyeing modifications to the bill, which Trump wants signed by July 4.
- Trump announced a trade deal with Vietnam, under which US products could be exported with 0% tariffs. In contrast, the US imposed a 20% tariff on Vietnam's goods and 40% duties on transshipment.
- Federal Reserve Chair Jerome Powell revealed that policy is modestly restrictive and added that he can’t say if July is too early to cut rates, though he wouldn’t rule anything out. He said that if not for President Donald Trump’s tariffs, the US central bank probably would have cut rates further.
- Money markets suggest that traders are pricing in 63.5 basis points of easing toward the end of the year, according to Prime Market Terminal data.
Source: Prime Market Terminal
XAU/USD technical outlook: Gold price poised to challenge $3,400
The Gold price upward bias remains in place, with traders set to clear the current week’s peak of $3,358 that clears the path to test the $,3400 mark. Momentum remains bullish as portrayed by the Relative Strength Index (RSI). Therefore, the path of least resistance leans toward higher prices.
If XAU/USD climbs past $3,400, expect a test of $3,450 and the all-time high (ATH) at $3,500. Conversely, if Gold falls below the 50-day Simple Moving Average (SMA) at $3,320, the first support would be $3,300. A breach of the latter will expose the June 30 swing low of $3,246.
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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