Gold trading reminder: Gold prices rebounded slightly amidst the tug-of-war between bulls and bears, and the Federal Reserve’s decision, together with the US GDP and the “small non-farm payrolls”, is coming!
2025-07-30 07:04:16
Gold prices rebounded on Tuesday (July 29th), hitting an intraday high of $3,333.93 per ounce before settling at $3,326.35, up approximately 0.36%. This rebound followed a sharp drop to around $3,302 per ounce on Monday (its lowest point since July 9th), demonstrating a rapid shift in market sentiment. This dramatic volatility is driven by the interplay of multiple key factors: the impending Federal Reserve interest rate decision, the crucial phase of Sino-US trade negotiations, and fluctuating global risk aversion. In early Asian trading on Wednesday (July 30th), spot gold prices fluctuated within a narrow range, currently trading around $3,327.35 per ounce.
The market generally expects the Federal Reserve to maintain interest rates in the 4.25%-4.50% range at its meeting concluding on Wednesday, but the real focus will be on any dovish signals it may release in the policy statement. Recent economic data paints a mixed picture: on the one hand, job openings fell by 275,000 to 7.437 million in June, while hiring declined by 261,000, indicating signs of labor market weakness. On the other hand, the consumer confidence index rose to 97.2 in July, exceeding expectations. This mixed economic performance has set the stage for a dovish-hawk debate within the Federal Reserve.
Particularly noteworthy was the unusual performance of the U.S. Treasury market: the 10-year Treasury yield fell to 4.330% (the lowest since July 3rd), while the 30-year yield was at 4.871% (a three-week low). Even more noteworthy was the $44 billion seven-year Treasury auction, which set multiple records: domestic investor demand reached 33.7%, end-user demand reached a staggering 96%, and primary dealers accounted for only 4.1%. This rare rush to buy bonds reflects strong demand for safe-haven assets and suggests that investors may be betting on a shift in Federal Reserve policy.
However, the US dollar index rose 0.30% to 98.91 on Tuesday, having hit its highest level since June 23 at 99.14. The index is set to record its first monthly increase this year, limiting the rebound in gold prices.
“The dollar has rebounded in July after a sharp decline in the first half of the year, and I think it’s mostly short covering,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “The question is whether this is a trend change or a long-overdue technical correction.”
The latest data from the U.S. Commerce Department showed that the goods trade deficit narrowed by 10.8% to $86 billion in June, the lowest level since September 2023, mainly due to a 4.2% drop in imports. This data reinforced market expectations for a sharp rebound in GDP in the second quarter, with economists predicting that GDP growth may reach 2.9%, higher than the previous expectation of 2.4%.
Following the Stockholm talks, China and the United States agreed to extend the tariff truce, with China's Ministry of Commerce confirming it will push for a partial extension of the 24% reciprocal tariffs suspended by the United States. While this progress prevented an immediate deterioration in the situation, analysts generally believe that the China-US negotiations will remain a complex and protracted process. City Index analyst Fawad Razaqzada noted, "Given the risk of a breakdown in the negotiations, savvy investors are maintaining some risk-averse positions."
It's worth noting that the United States recently reached trade agreements with the European Union and Japan (valued at $600 billion and $550 billion, respectively). These diplomatic breakthroughs could influence the Fed's decision-making. As Macquarie strategist Thierry Wizman noted, "The trade agreements weaken Powell's most common excuse for rejecting easing policy." This suggests that declining external risks could create room for the Fed to shift toward a dovish stance.
“There’s a sigh of relief that tariffs, at least the ones announced with Japan and the EU, and a potential 90-day extension with China, help remove the downside tail risk,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
The gold market is currently at a critical turning point. Technically, the $3,300 level provides strong support, while the $3,350 level presents short-term resistance. Fundamental factors are in fierce competition: on the one hand, easing global trade tensions are suppressing safe-haven demand; on the other hand, falling US Treasury yields and expectations of a possible Federal Reserve shift are providing support.
Of particular concern is the evolving inflation outlook. The IMF's latest report indicates that while the effective US tariff rate has fallen from 24.4% to 17.3%, the tariff pass-through effect could lead to elevated inflation in the second half of the year. This risk of stagflation could force the Federal Reserve to remain vigilant amidst slowing economic growth, providing significant support for gold.
Investors should pay close attention over the next 24 hours to the following: the Fed's policy statement hinting at a possible September rate cut, Powell's economic outlook assessment at the press conference, and the subsequent progress of the US-China trade negotiations. In particular, if the Fed sends a clear dovish signal, gold prices could break through the 3,350 resistance level; conversely, a more hawkish stance could lead to a retest of the 3,300 support level.
In addition, this trading day also requires attention to the interest rate decisions of the Bank of Japan and the Bank of Canada, the U.S. second quarter GDP series data and the U.S. July ADP employment data. The second quarter GDP data of Germany and the euro zone also need attention.
Risks to watch out for include the performance of US corporate earnings season (e.g., tech giants like Meta and Microsoft), Friday's non-farm payroll data (expected to increase by 110,000), and opposition within the EU to the US-EU trade agreement (with German and French leaders already expressing dissatisfaction). These factors could exacerbate market volatility, and gold investors should maintain flexible positions and avoid over-investing ahead of major risk events.
(Spot gold daily chart, source: Yihuitong)
At 07:00 Beijing time, spot gold was trading at $3327.68 per ounce.
Federal Reserve policy meeting: A signal of a dovish turn?
The market generally expects the Federal Reserve to maintain interest rates in the 4.25%-4.50% range at its meeting concluding on Wednesday, but the real focus will be on any dovish signals it may release in the policy statement. Recent economic data paints a mixed picture: on the one hand, job openings fell by 275,000 to 7.437 million in June, while hiring declined by 261,000, indicating signs of labor market weakness. On the other hand, the consumer confidence index rose to 97.2 in July, exceeding expectations. This mixed economic performance has set the stage for a dovish-hawk debate within the Federal Reserve.
Particularly noteworthy was the unusual performance of the U.S. Treasury market: the 10-year Treasury yield fell to 4.330% (the lowest since July 3rd), while the 30-year yield was at 4.871% (a three-week low). Even more noteworthy was the $44 billion seven-year Treasury auction, which set multiple records: domestic investor demand reached 33.7%, end-user demand reached a staggering 96%, and primary dealers accounted for only 4.1%. This rare rush to buy bonds reflects strong demand for safe-haven assets and suggests that investors may be betting on a shift in Federal Reserve policy.
However, the US dollar index rose 0.30% to 98.91 on Tuesday, having hit its highest level since June 23 at 99.14. The index is set to record its first monthly increase this year, limiting the rebound in gold prices.
“The dollar has rebounded in July after a sharp decline in the first half of the year, and I think it’s mostly short covering,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “The question is whether this is a trend change or a long-overdue technical correction.”
The latest data from the U.S. Commerce Department showed that the goods trade deficit narrowed by 10.8% to $86 billion in June, the lowest level since September 2023, mainly due to a 4.2% drop in imports. This data reinforced market expectations for a sharp rebound in GDP in the second quarter, with economists predicting that GDP growth may reach 2.9%, higher than the previous expectation of 2.4%.
US-China trade negotiations: A signal of a truce in a protracted war?
Following the Stockholm talks, China and the United States agreed to extend the tariff truce, with China's Ministry of Commerce confirming it will push for a partial extension of the 24% reciprocal tariffs suspended by the United States. While this progress prevented an immediate deterioration in the situation, analysts generally believe that the China-US negotiations will remain a complex and protracted process. City Index analyst Fawad Razaqzada noted, "Given the risk of a breakdown in the negotiations, savvy investors are maintaining some risk-averse positions."
It's worth noting that the United States recently reached trade agreements with the European Union and Japan (valued at $600 billion and $550 billion, respectively). These diplomatic breakthroughs could influence the Fed's decision-making. As Macquarie strategist Thierry Wizman noted, "The trade agreements weaken Powell's most common excuse for rejecting easing policy." This suggests that declining external risks could create room for the Fed to shift toward a dovish stance.
“There’s a sigh of relief that tariffs, at least the ones announced with Japan and the EU, and a potential 90-day extension with China, help remove the downside tail risk,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
Gold market outlook: a choice at a crossroads
The gold market is currently at a critical turning point. Technically, the $3,300 level provides strong support, while the $3,350 level presents short-term resistance. Fundamental factors are in fierce competition: on the one hand, easing global trade tensions are suppressing safe-haven demand; on the other hand, falling US Treasury yields and expectations of a possible Federal Reserve shift are providing support.
Of particular concern is the evolving inflation outlook. The IMF's latest report indicates that while the effective US tariff rate has fallen from 24.4% to 17.3%, the tariff pass-through effect could lead to elevated inflation in the second half of the year. This risk of stagflation could force the Federal Reserve to remain vigilant amidst slowing economic growth, providing significant support for gold.
Risk Warning
Investors should pay close attention over the next 24 hours to the following: the Fed's policy statement hinting at a possible September rate cut, Powell's economic outlook assessment at the press conference, and the subsequent progress of the US-China trade negotiations. In particular, if the Fed sends a clear dovish signal, gold prices could break through the 3,350 resistance level; conversely, a more hawkish stance could lead to a retest of the 3,300 support level.
In addition, this trading day also requires attention to the interest rate decisions of the Bank of Japan and the Bank of Canada, the U.S. second quarter GDP series data and the U.S. July ADP employment data. The second quarter GDP data of Germany and the euro zone also need attention.
Risks to watch out for include the performance of US corporate earnings season (e.g., tech giants like Meta and Microsoft), Friday's non-farm payroll data (expected to increase by 110,000), and opposition within the EU to the US-EU trade agreement (with German and French leaders already expressing dissatisfaction). These factors could exacerbate market volatility, and gold investors should maintain flexible positions and avoid over-investing ahead of major risk events.
(Spot gold daily chart, source: Yihuitong)
At 07:00 Beijing time, spot gold was trading at $3327.68 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
