Gold market analysis

"Gold Price Short-Term Trend Sideways Weak" 4/7 10:32 am Completed 

The U.S. June non-farm payroll report was released. The overall number of jobs increased by 147,000, but the number of new government jobs accounted for 73,000, while the number of new private sector jobs was 74,000. The average hourly wage rose to $36.30, and the unemployment rate dropped by 0.1 percentage point to 4.1%. The overall labor force decreased by 130,000, the number of unemployed people also decreased by 222,000, while the number of people who left the labor market increased by 329,000. 

After the data was released, the interest rate futures market expected that the probability of the Federal Reserve maintaining the federal funds rate at 4.25% to 4.5% in July rose sharply to 93.3%. The US dollar exchange rate rose across the board. The euro fell to 1.1718 against the US dollar; the pound sterling dropped to 1.3586 against the US dollar; and the US dollar rose sharply to 145.23 against the Japanese yen. The gold price also plunged, with the spot gold price once falling to $331.18 per ounce. 

Will the Federal Reserve definitely not cut interest rates in July? 

However, does the June non-farm payroll report indicate that the US job market is completely problem-free? The answer is no. The increase in public sector jobs accounted for almost half of all new jobs. If we exclude the changes in public sector employment, starting from January 2021 after the pandemic, the average monthly non-farm payroll increase in the private sector has been steadily decreasing by approximately 100,000 positions each year. In 2021, it was 479,667; in 2022, 378,833; in 2023, 207,667; in 2024, 162,250; and in the first half of this year, it averaged 120,667, still maintaining an increase of over 100,000. Nevertheless, the trend shows that job growth in the US private sector is clearly slowing down. Whether the Federal Reserve will not cut interest rates in July depends first on what kind of trade agreements the US reaches with its trading partners after July 9th, and secondly on whether the series of price data for June reflect a further slowdown in inflation. 

The price of silver is expected to break through its peak. 

After a sharp drop yesterday, spot gold prices stabilized above $3,322. However, attempts to break through $3,335 were unsuccessful. This morning in the early Asian session, the highest price reached was only $3,334.4. From the hourly chart, it is clear that $3,352.45 is the short-term maximum resistance for the rebound. With the expectation of no interest rate cut by the Federal Reserve in July, gold prices are likely to fluctuate between $3,320 and $3,344 in the short term. If it breaks below $3,311.8, it is expected to test $3,306 and $3,292. 

Relatively speaking, the price of silver closed with a bullish candle yesterday, seemingly confirming the view that the gold-silver ratio was too high and is now undergoing correction. From the daily chart, the support at $35 is strong for the silver price, and it shows a small round bottom pattern. The market is likely to break through the high of $37.335 on June 18th in the future. In the short term, $36.34 is an important support level for any adjustment. 

The above content is for reference only and does not constitute investment advice. 

MTF Special Analyst Zheng Guangfu