Gold Market Outlook: Spot Gold Continues to Rally After Nonfarm Payroll Data

Huitong Network, July 4—— U.S. non-farm employment data released on Thursday showed weak performance, triggering a sharp rebound in gold prices that has continued its upward momentum. Although gold has started this month and quarter with gains, it should be noted that gold has just experienced its most challenging quarter in recent years, with a drop of nearly 30% from the high reached in January. Gold prices posted monthly losses throughout the second quarter, driven by a fundamental shift in market sentiment: investors are reassessing the Fed's rate path and the U.S. economic outlook.

The U.S. non-farm payroll data released on Thursday was weak, which led to a sharp rebound in gold prices, and the momentum has continued. While gold has rallied at the start of both this month and the new quarter, it should not be overlooked that gold has just experienced its most difficult quarter in recent years, dropping nearly 30% from the cyclical high reached in January. Gold prices recorded consecutive monthly declines in Q2, a reflection of a fundamental shift in market sentiment: investors are reassessing the Fed's rate path and the U.S. economic outlook.



Currently, one of the biggest bearish factors facing gold is the Fed’s latest policy stance. Under the leadership of Kevin Walsh, the Fed has decided to abandon forward guidance. Putting aside the weak employment data this time, the market is more convinced that the United States will continue to raise rates, and that the high interest rate environment will persist for a long time. As a non-yielding asset, gold’s holding appeal is significantly weakened by sustained high interest rates. If inflation proves much more persistent than the market expects, forcing the Fed to hike rates again later this year, gold prices could face even more pressure.

Meanwhile, the strengthening U.S. dollar and rising U.S. Treasury yields continue to hinder gold from making a sustained recovery. Admittedly, the dollar's weakness on Thursday briefly gave gold some breathing space, but this rally is likely just a short-term rebound and not a reversal of the overall trend.

Ongoing central bank gold buying remains a key source of market support, as many countries continue to move toward de-dollarizing their foreign exchange reserves. However, the geopolitical premium supporting gold is fading. After the U.S. and Iran reached an agreement to reopen the Strait of Hormuz to navigation, market focus has shifted back to economic data and monetary policy, clearly cooling traditional safe-haven demand for gold.

Boosted by a weaker U.S. dollar, gold prices surged significantly yesterday, and the rebound has continued during today’s session. Gold has closed above the $4,000 mark on a daily basis for several consecutive trading days, a sign that carries some bullish implications.





(Spot Gold Daily Chart Source: Easy Huitong)

At the daily chart level, the core resistance zone is between $4,195 and $4,200, which also aligns with the downtrend resistance line. If gold decisively breaks through this area, the technical outlook for bulls will be significantly strengthened.

On the other hand, if gold reverses from current levels and falls below the $4,100 support zone (shaded area on the chart: $4,098—$4,136), the short-term outlook will revert to being dominated by the bears.

Analysis suggests that only if gold closes below $4,000 on the daily chart will a new wave of technical selling pressure be triggered in the days to weeks ahead; should this scenario arise, the comprehensive bearish outlook for gold will be reinstated. Given the current technical setup, a neutral and wait-and-see stance on gold is appropriate.

Eastern 8th Zone 00:36 (UTC+8), spot gold is quoted at $4,169.29 per ounce, up 1.11%.