- The price of gold is recovered at $ 3,350 after the weak report of non -agricultural payrolls of the United States shows only 73k jobs added in July.
- May and June payrolls were checked down in 258k; Agitation in the labor market supports the impulse of the FED hawks for cuts.
- Fed funds now value 76% probabilities of a 25 -PB rate cut in September.
- The ISM manufacturing PMI shows that the sector remains in recession territory; The feeling of the UOM consumer deteriorates.
The price of gold rose more than 1.50% on Friday after the publication of a discouraging report of non -agricultural payroll (NFP) in the United States (USA), which showed that the labor market is cooling faster than expected. In addition, an escalation of geopolitical risks between Russia and the US led the operators to buy gold, which is around $ 3,350 at the time of writing.
Market participants had begun to value an interest rate cut by the Federal Reserve (FED), after the Julio Employment Data. Although the unemployment rate remained almost unchanged, the cracks in the labor market vindicated the governors of the FED, Michelle Bowman and Christopher Waller, who favored a cut of 25 basic points (PB) at the meeting of July 29-30.
Additional data revealed that business activity in the manufacturing sector remains at recession levels, as announced by the Institute for Supply Management (ISM) in its July report. At the same time, the feeling of the consumer deteriorated, according to the Survey of the University of Michigan (UOM).
Consequently, gold prices have risen after falling to a minimum of one month of 3,268 $ on Thursday, after a strong report of unemployment subsidy applications. May and June payrolls were reviewed down in a massive 258k, suggesting a weaker labor market. This was the second largest two months in the NFP since 1979, surpassed only by the April 2020 report.
The futures contract of the federal funds of December 2025 suggests that investors expect at least 57 basic points of flexibility towards the end of the year. The probabilities for the September meeting are at a 76% probability of a 25 bp cut to the range of 4.00-4.25%.
In the Geopolitical Front, the president of the USA, Donald Trump, revealed a wave of tariffs on dozens of commercial partners. Recently, Trump sent two nuclear submarines to be positioned in appropriate regions in response to the Vice -Primer Russian Minister Medvedev, who said Trump is playing an ultimatum game with Russia, adding that this is a “step towards war.”
Medvedev’s comments were related to Washington’s reduction for the deadline for Russia to reach a peace agreement with Ukraine.
What moves the market today: gold shoots despite the Fed officials dismiss the employment data of July
- Together with the financial data series, Fed officials had begun to cross the lines. Beth Hammack of Cleveland’s Fed said the NFP report was disappointing, although the labor market is still in balance, and is “safe from the decision taken earlier this week.”
- Raphael Bostic of the Atlanta Fed said that the labor market is slowing down from strong levels and pointed out that the risks to inflation are much greater than the risk of employment, favoring a cut and staying in a hard line posture.
- The US treasure yields had fallen into the short and long ends of the curve. In the center, the 10 -year Treasury Bonus dropped 15 basic points to 4,228%. The real US yields, which are calculated by subtracting nominal yield less inflation expectations, also fell 12 bp to 1,838%, a wind in favor for gold prices.
- The US non -agricultural payrolls increased by 73K, well below the 110K forecasts. Additional employment data revealed that the unemployment rate rose from 4.1% to 4.2% as expected, and average average earnings increased from 3.7% to 3.9%, exceeding 3.8% forecasts.
- The ISM manufacturing PMI contracted for the fifth consecutive month after two months of expansion, preceded by 26 months of contraction. The PMI fell from 49.0 to 48.0, failing in the forecasts of 49.5. The employment subcomponent contracted even more, while the prices paid showed that the costs are decreasing.
- The feeling of the consumer improved for the second consecutive month, although it decreased compared to its preliminary reading from 61.8 to 61.7. Inflation expectations were reviewed for 1 year to 4.5% from 4.4%. During the next five years, US households expect prices to fall from 3.6% to 3.4%.
Technical Perspectives of the Xau/USD: The price of gold remains bullish while buyers point to $ 3.350
The update of the price of gold resumed on Friday, although cash prices wandered near the simple mobile average (SMA) of 50 days at $ 3,340. For a bullish resumption, buyers must conquer the $ 3,350, followed by the figure of $ 3,400. A rupture of the latter exposes key levels of resistance, being the peak of June 16 in $ 3,452, before the annual maximum of $ 3,500.
On the other hand, if the XAU/USD falls below the 50 -day SMA, the road would clear to test the following area of interest in $ 3,300.
GOLD – FREQUENT QUESTIONS
Gold has played a fundamental role in the history of mankind, since it has been widely used as a deposit of value and a half of exchange. At present, apart from its brightness and use for jewelry, precious metal is considered an active refuge, which means that it is considered a good investment in turbulent times. Gold is also considered a coverage against inflation and depreciation of currencies, since it does not depend on any specific issuer or government.
Central banks are the greatest gold holders. In their objective of supporting their currencies in turbulent times, central banks tend to diversify their reserves and buy gold to improve the perception of strength of the economy and currency. High gold reserves can be a source of trust for the solvency of a country. Central banks added 1,136 tons of gold worth 70,000 million to their reservations in 2022, according to data from the World Gold Council. It is the largest annual purchase since there are records. The central banks of emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has a reverse correlation with the US dollar and US Treasury bonds, which are the main reserve and shelter assets. When the dollar depreciates, the price of gold tends to rise, which allows investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rebound in the stock market tends to weaken the price of gold, while mass sales in higher risk markets tend to favor precious metal.
The price of gold can move due to a wide range of factors. Geopolitical instability or fear of a deep recession can cause the price of gold to rise rapidly due to its condition of active refuge. As an asset without yield, the price of gold tends to rise when interest rates lower, while the money increases to the yellow metal. Even so, most movements depend on how the US dollar (USD) behaves, since the asset is quoted in dollars (Xau/USD). A strong dollar tends to keep the price of gold controlled, while a weakest dollar probably thrusts gold prices.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
