- Gold fell to a fresh four-week low below $3,300.
- The Iran-Israel ceasefire weighed heavily on Gold this week.
- The technical outlook highlights a buildup of bearish momentum ahead of key US employment data.
Gold (XAU/USD) came strong under selling pressure and fell below $3,300 as geopolitical tensions in the Middle East eased. The technical outlook reflects a bearish bias in the near term as investors gear up for June employment data from the US.
Gold struggles to find demand after Iran-Israel ceasefire
Gold started the week with a bullish gap following the news of the United States’ bombing of several Iranian nuclear sites over the weekend. But, in the second half of the day on Monday, the USD benefited from the better-than-expected S&P Global Purchasing Managers Index (PMI) data and made it difficult for XAU/USD to hold its ground.
As risk flows dominated the action in financial markets on Tuesday, Gold declined sharply and fell below $3,300 for the first time since early June. US President Donald Trump announced early Tuesday that Iran and Israel agreed to a ceasefire, easing geopolitical tensions and making it difficult for safe-haven assets to find demand.
Later in the day, Federal Reserve Chairman Jerome Powell adopted a cautious tone on policy-easing while testifying about the Semiannual Monetary Policy Report before the House Financial Services Committee. Powell reiterated that they are not in a rush to cut interest rates, adding that they need more time to confirm that inflation pressures caused by tariffs will remain contained. These comments supported the USD and further weighed on XAU/USD.
The USD came under selling pressure late Wednesday as the Fed’s independence came under question again, helping XAU/USD erase a small portion of its weekly losses.
The Wall Street Journal (WSJ) reported that US President Donald Trump is considering naming his candidate for the next Chairman of the Fed early, in a bid to undermine Fed Chair Jerome Powell. Citing people familiar with the matter, the WSJ said he could announce Powell’s possible replacement by September or October. Trump is reportedly evaluating the commitment to cut rates from Kevin Hassett, Director of the National Economic Council, and Treasury Secretary Scott Bessent, who are reportedly among the names under consideration. The USD Index slumped to its weakest level since March 2022 on Thursday following this development. Nevertheless, Gold failed to gather bullish momentum as the market mood remained upbeat.
Following the meager recovery attempt, Gold continued to stretch lower early Friday and touched its weakest level in nearly a month. The final data releases of the week from the US showed that annual inflation, as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, rose to 2.3% in May from 2.2% in April (revised from 2.1%). The core PCE Price Index, which excludes volatile food and energy prices, rose 2.7% in the same period. Although the USD struggled to find demand following these figures, the risk-positive market environment didn’t allow XAU/USD to shake off the bearish pressure.
Gold investors await key data releases from the US
Fed Chairman Powell will participate in a policy panel on Tuesday with other central bankers at the European Central Bank (ECB) Forum on Central Banking in Sintra, Portugal. Later in the day, the US economic calendar will feature the Institute for Supply Management’s Manufacturing PMI data for June and JOLTS Job Openings data for May.
The CME Group FedWatch Tool shows that markets are currently pricing in about a 20% probability of a Fed rate cut in July. This market positioning suggests that the USD could stage a rebound with the immediate reaction in case Powell hints again that they are likely to wait until September before taking action.
On Wednesday, Automatic Data Processing (ADP) will release employment figures for the private sector. Because financial markets will be closed in observance of the July 4 holiday on Friday, the US Bureau of Labor Statistics will publish the June employment report on Thursday. Hence, investors could refrain from taking large positions based on the ADP data.
During his congressional testimony, Powell noted that the labor market was strong and was near full employment. However, he also acknowledged that a weakening labor market could cause them to ease the policy sooner.
A significant negative surprise, with a Nonfarm Payrolls reading below 100,000, could revive expectations for a rate cut next month. In this scenario, the USD could come under renewed bearish pressure and open the door for a decisive rebound in Gold. On the flip side, a print above 150,000 would suggest that the labor market is healthy enough for the Fed to take its time to assess inflation dynamics. In this scenario, Gold could turn south in the second half of the week.
Gold technical analysis
Gold dropped below the lower limit of the six-month-old ascending regression channel and made a daily close below the 50-day Simple Moving Average (SMA) for the first time since early January. Additionally, the Relative Strength Index (RSI) indicator on the daily chart fell to a fresh 2025 low near 40, reflecting a buildup of bearish momentum.
In case Gold confirms $3,285 (Fibonacci 23.6% retracement of the six-month-old uptrend) as resistance, $3,200 (static level, round level) could be seen as the next support level before $3,160-$3,150 (100-day SMA, Fibonacci 50% retracement).
On the upside, $3,330 (lower limit of the ascending channel, 50-day SMA) could be seen as the first resistance level ahead of $3,355 (20-day SMA) and $3,400 (static level, round level).
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
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