The much-anticipated July 4th U.S. non-farm payrolls report, a key focus for financial markets, has been released, exerting a profound impact—particularly sending shockwaves through the gold market.
The U.S. employment data released on Thursday showed unexpectedly robust performance. This non-farm payrolls report acted as a "bombshell" in financial markets, completely dispelling earlier expectations of an imminent Fed rate cut. Market sentiment has long been highly sensitive to the trajectory of the Federal Reserve's monetary policy, with rate-cut expectations serving as a "stimulant" that influenced various asset prices—gold being one of them.
Following the release of the U.S. jobs data, the U.S. dollar index surged significantly ahead of the U.S. trading session. As the world's primary reserve currency, the dollar's movements are intricately linked to various asset classes. The rise in the dollar index exerted substantial downward pressure on spot gold prices, which are denominated in dollars. Spot gold prices plummeted, at one point dropping to $3,311.65—a sharp decline of over $50 from the day's high—a volatility that left market participants on edge.
From a technical perspective, a double-top pattern has begun to form in gold prices. In technical analysis, a double-top is generally regarded as a reliable reversal signal, suggesting that gold prices may face further downward pressure in the short term. This pattern emerges when prices reach a certain level twice but fail to break through, followed by a retreat. The formation of this double-top in gold, combined with the impact of the non-farm payrolls data on Fed rate-cut expectations, has reinforced market expectations of a gold price decline.
For gold investors, this market turbulence undoubtedly presents significant challenges. Those who had flocked to gold amid earlier rate-cut expectations now face the risk of asset depreciation. Some investors had hoped to capitalize on gold's safe-haven appeal and potential price gains from anticipated monetary easing, but the unexpectedly strong jobs data has upended those expectations.
From a macroeconomic standpoint, the robust U.S. employment figures indicate that the economy remains resilient at this stage. While earlier market concerns about economic prospects had fueled expectations of Fed rate cuts, the latest jobs data suggest the U.S. economy may not be as fragile as feared. This has also influenced the Fed's monetary policy considerations, seemingly reducing the urgency for rate cuts.
Looking ahead, the gold market remains fraught with uncertainty. Although the double-top pattern and diminished rate-cut expectations currently weigh on prices, the global economic landscape remains complex and volatile. Should U.S. economic data reverse course or geopolitical risks escalate anew, gold—as a safe-haven asset—could still find renewed demand. However, in the near term, the gold market is likely to continue digesting the impact of the non-farm payrolls report, with prices expected to remain range-bound in a relatively weak zone. Investors must stay vigilant, closely monitor market developments, and exercise caution in their decision-making to navigate this rapidly shifting gold market.
