The price of gold dropped following unexpectedly strong US employment growth in June, though losses were minimal. While the report shows some weaknesses, much of the job growth occurred in the public sector.
The slight reduction in the unemployment rate appears positive for the US Federal Reserve. This suggests potential delays in interest rate cuts, which puts temporary pressure on gold prices.
Current Support for Gold
Despite this, the primary support for gold lies in US policies that erode confidence, rather than interest rate expectations. Unless there is a major policy change, the recent setback for gold may only be temporary.
From what we’ve observed, the sharp movement in gold after the US employment data shouldn’t be seen as a lasting directional shift. The core of the issue doesn’t lie in the headline numbers alone—they’re painting a more complex picture underneath. Temporary pressure came from a slightly lower unemployment rate and strong public sector additions, both of which make immediate monetary easing less likely. Notably though, private sector participation has cooled. That doesn’t exactly shout economic overheat.
Here’s what matters now: the market took the nonfarm payroll results as a reason to dial back expectations of swift cuts in US interest rates. In doing so, short-term price sensitivity came into focus. Yet these numbers, when taken apart, show the bulk of job creation came from government hiring. That doesn’t necessarily point to an engine of real growth firing on all cylinders.
What underpins spot gold more consistently remains confidence—or rather, a lack of it—in broader fiscal thinking. When guidance from central institutions leaves questions open, especially mid-term, gold tends to reclaim strength. In this sense, it’s neither inflation hedging nor rate bets that lead the charge; it’s trust, or its absence.
Market Reactions and Interpretations
Powell’s latest comments, for instance, struck a more neutral tone. Markets interpreted that as a wait-and-see stance, favouring data dependency. No immediate signal towards a policy pivot emerged. For trading desks, that implies a window of uncertainty likely running through the next one or two headline economic releases. Scheduled comments from core Fed members in this period might only add to the sways—it’s unlikely they’ll echo each other directly.
From a positioning view, exposure at the shorter end has trimmed, suggesting some participants were caught offside. Futures data shows modestly lower net longs following the report. The shallowness of the sell-off indicates undercurrents of support remain intact. What we believe worth monitoring in the next two weeks is how the two-year Treasury reacts around U.S. CPI and PPI prints. Should yields soften despite neutral Fed speak, we could see gold ticking higher even in the absence of new dovish language. That would signal the market pricing in downturn fears independent of the Fed’s pace.
At the same time, technical levels continue to carry weight. Holding above the 50-day moving average, which is now rising slowly, suggests buyers aren’t stepping away entirely. Any dip below would likely see further stop-loss triggers, but outside of that sort of forced unwind, physical buying, particularly from Asia, may step in quietly.
What we’ve gathered is that market faith in monetary stabilisers is delicate, and any surprise geopolitical or fiscal headlines could shift pricing swiftly. Gold remains a barometer of this nervousness more than anything else. Over the next fortnight, every policy remark will matter more for what it implies about coordination—or the lack of it—than for any direct forecast. That’s where positioning will be made or lost.
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