Gold closed last week at the important short-term resistance level of 3,350 USD per ounce. According to Kitco News' weekly survey, market analyst sentiment is at its highest in months. Of the 17 analysts surveyed, none predicted a decline in gold prices this week.
The July US jobs report increased expectations that the Fed will cut interest rates in September, strongly supporting gold prices. The jobs report, once a key pillar preventing the Fed from cutting rates, is now putting pressure in the opposite direction.
Adrian Day, president of Adrian Day Asset Management, expects gold to recover this week.
While maintaining a neutral stance, expert David Morrison believes the jobs data is supportive of gold, but not enough to break out of the current range. "It may take more consolidation time before there is enough force to surpass 3,400 USD and hold above that level during corrections," he said, adding that technical indicators have "cleared" the overbought zone, creating conditions for a new uptrend.
Besides economic data, some experts also believe that gold continues to be an attractive safe haven amid increasing global instability, especially as the US increases import tariffs with many countries.
Despite reaching trade agreements with Japan and Europe (15% tariffs), countries that have not finalized negotiations like Canada, India, Taiwan, South Africa, and Switzerland face higher tariffs from 20% to almost 40%.
"Tariffs mean countries will trade less in USD, and I expect gold to continue to benefit as the world looks for alternative monetary assets," said Chris Vecchio, Futures Strategy Director at Tastylive.com.
Gold has struggled recently due to a stronger USD and profit-taking pressure, but this jobs shock could be the catalyst for the precious metal to regain momentum.
Marc Chandler, Managing Director at Bannockburn Capital Markets, also believes that weak jobs data and the sharp decline in interest rates and the USD have created a bottom for gold. If the price surpasses 3,375 USD, the next target is the 3,440 USD zone. The market is currently quite confident in the possibility of an interest rate cut in September and another one in Quarter IV.
Quynh Trang
