Gold market analysis

"Gold prices are expected to remain range-bound in the short term" 7/7 9:50 am Finalized 

The U.S. June non-farm payroll report was better than expected, which cooled market expectations for the Federal Reserve to cut interest rates this month. As a result, gold prices dropped by 1% last Thursday. Last Friday was the U.S. Independence Day, and the gold market closed early. Gold prices closed slightly higher. August gold futures rose 0.11% to $3,346.5 per ounce. Spot gold closed at $3,336.7, up 0.1%. 

US President Trump signed the "Big and Beautiful Bill" into law last Friday. The nonpartisan Congressional Budget Office (CBO) expects the bill to increase the US federal deficit by $3.3 trillion over the next 10 years and cause nearly 12 million people to lose their health insurance. Reciprocal tariffs and fiscal concerns have put pressure on the US dollar exchange rate, which may boost the safe-haven demand for precious metals. 

The outcome of trade negotiations influences the gold price. 

July 9th will be the deadline for the suspension of reciprocal tariffs. The US and China have reached a framework agreement, while the US and the UK and the US and Vietnam have reached agreements. Negotiations between the US and the EU are still ongoing. The Trump administration said that it began sending letters to various countries last Friday to determine the tariff rates they will face when importing to the US. As there are no important economic data releases in the US this week, gold prices are expected to remain in a range-bound pattern. The outcome of the negotiations between the US and its trading partners before the deadline is believed to be the only excuse for gold prices to break out of the sideways market. 

In terms of the trend, since June 24th, the 20-day and 50-day SMA of the spot gold price have been in a balanced sideways development. Currently, the gold price is fluctuating between the two lines (3349.7 to 3321.8). Investors should note that the spot gold price on the daily chart presented a bearish engulfing pattern last Thursday, indicating that the high of $3365.8 on that day may become a major resistance for the medium-term rebound. Moreover, although the SPDR Gold ETF holdings increased significantly by 7.16 tons to 957.4 tons on June 24th, they dropped to 947.66 tons on July 3rd, reflecting that large investors still tend to reduce their holdings at higher prices. 

The 50-day moving average may become a medium-term resistance. 

Gold prices opened slightly higher in the Asian market this morning but then plunged sharply, breaking through the low point seen after the release of the non-farm payroll report last Thursday. After briefly testing the $3,307 level, it rebounded. It was just short of the 50% retracement level of the biggest pullback from June 29 to July 2 at $3,306.63. I think this is due to the approaching expiration of the tariff truce. Judging from the current situation, import inflation in the US and its trading partners will not rise significantly as a result. Gold has lost its role as an inflation hedge, and the current price is only about $200 away from its historical low. Long positions should take profits at higher levels. Optimistically speaking, the spot gold price will fluctuate between $3,312 and $3,352 today. However, it cannot be ruled out that it will test the $3,291 level (the 100% Fibonacci extension of the decline on the hourly chart). At that time, $3,312 is expected to be a resistance level for the rebound, and the 50-day SMA will be a medium-term resistance. 

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

MTF Special Analyst Zheng Guangfu