GOLD Analysis
Gold Retreats to One-Week Low Near $3,300 Amid Strong Jobs Data and Trade Optimism
Highlights
- Gold slips to $3,300/oz as robust US jobs data curb rate-cut expectations and lift real yields.
- US-China trade talks in London buoy risk appetite, drawing flows from gold into equities.
- Renewed Russia-Ukraine strikes keep geopolitical risk alive, limiting gold’s downside.
Overview:
Gold prices have eased back toward $3,320 per ounce (current market price), registering a third consecutive session of losses and testing one-week lows around $3,300. The recent downturn was driven primarily by a stronger-than-expected US employment report released on Friday, which showed robust job creation that tamped down market worries of an imminent economic slowdown. As a result, investors scaled back expectations for near-term Federal Reserve rate cuts—a key driver of gold’s appeal—allowing real yields to edge higher and diminishing the opportunity cost of holding non-yielding bullion.
Concurrently, market attention has shifted to a new round of US-China trade negotiations taking place in London. Hopes that diplomats can build on the recent tariff truce have underpinned risk sentiment, encouraging flows back into equities and away from defensive assets. While any substantive breakthrough remains uncertain, the prospect of diplomatic progress has momentarily weighed on gold.
Despite these headwinds, geopolitical tensions continue to provide a floor under prices. In Eastern Europe, Russia escalated missile and drone strikes on Ukrainian targets in retaliation for Kyiv’s attacks on Russian air bases, suggesting that the conflict still has the capacity to flare and renew safe-haven demand. Traders remain attentive to developments in Ukraine, as any sudden intensification could spark another liquidity-driven flight into gold.
On the data calendar, the imminent release of the US Final Wholesale Inventories m/m report is expected to offer additional clues on the health of domestic supply chains and inventory management—factors that can influence both inflation dynamics and the Fed’s policy outlook. A sharp build in wholesale inventories could hint at sluggish demand, potentially reversing rate-cut expectations and further pressuring gold. Conversely, a drawdown might revive reflationary bets and support bullion.
Technical Analysis & Strategy
- Current Market Price (CMP): $3,320/oz
- Immediate Support: $3,270 (recent intraday swing low)
- Immediate Resistance: $3,330 (local high from two sessions ago)
Given the prevailing downtrend and the convergence of economic and trade catalysts, a sell-on-rallies approach is recommended. Traders may look to initiate short positions near $3,340, targeting $3,286, with a stop-loss above $3,356 to protect against sudden reversals driven by geopolitical shocks or unexpected data surprises.