Gold trading reminder: Non-farm payrolls "collapse" + tariff storm, gold prices soared over 2% to a one-week high! Bulls target 3400
2025-08-04 07:05:06
Last Friday (August 1st), spot gold prices surged 2.23%, hitting a one-week high of $3,363.37 per ounce before closing at $3,363.16 per ounce. This surge was driven not only by unexpectedly weak US non-farm payroll data but also by safe-haven demand triggered by the Trump administration's latest tariff policy. Global economic uncertainty, a weak dollar, and growing expectations of a Federal Reserve rate cut have all provided strong momentum for gold's rise. In early Asian trading on Monday (August 4th), spot gold prices fluctuated at high levels, currently trading around $3,358.66 per ounce.
Non-farm payroll data was far below expectations
The latest data released by the U.S. Bureau of Labor Statistics showed that non-farm payrolls increased by only 73,000 jobs in July, far below economists' expectations of 110,000. The June figure was significantly revised downward to 14,000 jobs, and the non-farm payroll gains for the previous two months were revised down by 258,000 jobs. This suggests a sharp deterioration in labor market conditions, increasing the likelihood of a September interest rate cut by the Federal Reserve. The unemployment rate rose slightly to 4.2% from 4.1% in June, further confirming the weakening economic momentum. This disappointing employment report quickly undermined market confidence in the U.S. economy, prompting investors to reassess the Federal Reserve's monetary policy path.
The probability of a rate cut soars to 90%.
The weak employment data directly boosted market expectations for a Federal Reserve rate cut. According to the Chicago Mercantile Exchange's (CME) FedWatch tool, the probability of a September rate cut surged to 90% from 38% on Thursday. The market generally expects the Fed to cut interest rates twice before the end of the year, with the first cut possibly coming in September.
Jamie Cox, managing partner of Harris Financial Group, even boldly predicted that the Federal Reserve might cut interest rates by 50 basis points in September to make up for its previous mistake of keeping rates unchanged. This expectation has provided strong support for gold, as gold, as a non-yielding asset, tends to perform better in a low-interest rate environment.
The dollar index posted its biggest drop since April
The weak employment data not only boosted expectations of rate cuts but also put significant pressure on the US dollar. On August 1, the US dollar index plummeted 1.39% to 98.68, its largest single-day drop since April. The weakening dollar directly reduced the opportunity cost of holding gold, pushing prices further up. Helen Given, director of trading at Money USA in Washington, said the labor market weakness exceeded expectations and the dollar's downward trend is likely to continue in the coming weeks, especially given expectations of a more dovish Federal Reserve policy.
U.S. Treasury yields fell sharply
Meanwhile, U.S. Treasury yields also fell sharply due to weak jobs data. The two-year Treasury yield fell 24.1 basis points to 3.710%, a five-week low, while the 10-year Treasury yield fell to 4.223%, its largest single-day drop since early April. The bullish steepening of the yield curve reflects strong market expectations of an imminent Federal Reserve rate cut. Chip Hughey of Truist Advisory Services noted that the Fed currently faces the dual dilemma of inflation and a slowing labor market. Rising expectations of rate cuts will further depress yields, creating a favorable environment for gold prices.
Trump's tariff policy triggers market turmoil
US President Trump recently imposed steep tariffs on products from several trading partners, including Canada, Brazil, and India, with rates reaching 50%, 39%, and 25%, respectively. This has led to a global stock market plunge and a surge in risk aversion. While the US Treasury market has been relatively muted in response to the tariff news, gold, as a traditional safe-haven asset, has remained popular among investors in this context.
FXTM senior market strategist Lukman Otunuga noted that gold's rise benefited from the collapse of the US dollar, while the uncertainty brought about by tariff policies further strengthened the attractiveness of gold as an economic hedge.
Tariffs have not only driven up the price of imported raw materials but also caused the US manufacturing Purchasing Managers' Index (PMI) to contract for the fifth consecutive month, falling to 48.0 in July from 49.0 in June. Factory employment also hit a five-year low. The complex global economic environment, coupled with geopolitical tensions such as Israel's military operations in Gaza, Houthi drone attacks against Israel, and Ukrainian attacks on Russian defense-industrial complexes, has provided additional support for gold's safe-haven appeal. Faced with multiple uncertainties, investors are inclined to allocate funds to safe assets like gold.
Powell's Hawkish Strategy: Shift in Stance <br/>Earlier this week, Federal Reserve Chairman Jerome Powell stated that a September rate cut had not yet been decided, emphasizing that action would be based on economic data. However, weak employment data has cast doubt on the Fed's hawkish stance. Fed Governor Waller and Vice Chairman Bowman expressed concerns about a slowing labor market before the release of the jobs data, while other officials, such as Atlanta Fed President Raphael Bostic, have downplayed the data's impact, stating that it would not change the decision to maintain interest rates. This internal disagreement highlights the Fed's dilemma in balancing its dual goals of inflation and employment.
Upcoming data is crucial . August employment data (to be released on September 5) is widely expected to be a key indicator for the Federal Reserve's September 16-17 meeting. If the data continues to show labor market weakness, the likelihood of a rate cut will be further strengthened, providing further upward momentum for gold. Conversely, an unexpected rebound in economic data could temporarily suppress gold prices, but the overall bullish trend remains resilient in the current environment.
Breakthrough of key resistance level
From a technical analysis perspective, gold's upward momentum is strengthening. FXTM's Lukman Otunuga stated that gold prices have broken through the resistance levels of $3,330 and $3,350. A weekly close above these levels would open the way for further gains to $3,400. The current price is only about 2% away from $3,400, demonstrating a strong bullish stance. Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, also believes that given the radical shift in expectations for rate cuts, gold is likely to reach $3,400 per ounce in the near term.
Potential Pullback Risk <br/>Despite strong bullish momentum, the market does carry some risk of a pullback. Otunuga warned that a break below $3,330 could trigger further declines, targeting $3,300 and the 100-day moving average. Investors should closely monitor key economic data in the coming weeks, particularly the August jobs report, as its results will directly impact the Federal Reserve's September meeting and, consequently, gold prices.
The gold market's strong performance last week fully reflects the combined effects of a slowing US economy, a weakening US dollar, and global demand for safe-haven assets. Weak non-farm payroll data fueled expectations of a Federal Reserve rate cut, while the decline in both the US dollar and US Treasury yields provided strong support for gold prices. Trump's tariff policy further fueled risk aversion. Technically, having broken through key resistance, gold prices are expected to reach $3,400/oz in the short term, but investors remain wary of potential pullbacks.
Looking ahead, August employment data and the Federal Reserve's policy direction will be key catalysts for gold prices. Against the backdrop of growing global economic uncertainty, gold's appeal as a safe-haven asset is expected to further increase. Investors should closely monitor market dynamics and seize potential opportunities.
On this trading day, we need to pay attention to the monthly rate of U.S. factory orders in June and continue to pay attention to news related to the international trade situation and geopolitical situation.
(Spot gold daily chart, source: Yihuitong)
At 07:01 Beijing time, spot gold was trading at $3358.73 per ounce.
Weak employment data raises expectations of a Fed rate cut
Non-farm payroll data was far below expectations
The latest data released by the U.S. Bureau of Labor Statistics showed that non-farm payrolls increased by only 73,000 jobs in July, far below economists' expectations of 110,000. The June figure was significantly revised downward to 14,000 jobs, and the non-farm payroll gains for the previous two months were revised down by 258,000 jobs. This suggests a sharp deterioration in labor market conditions, increasing the likelihood of a September interest rate cut by the Federal Reserve. The unemployment rate rose slightly to 4.2% from 4.1% in June, further confirming the weakening economic momentum. This disappointing employment report quickly undermined market confidence in the U.S. economy, prompting investors to reassess the Federal Reserve's monetary policy path.
The probability of a rate cut soars to 90%.
The weak employment data directly boosted market expectations for a Federal Reserve rate cut. According to the Chicago Mercantile Exchange's (CME) FedWatch tool, the probability of a September rate cut surged to 90% from 38% on Thursday. The market generally expects the Fed to cut interest rates twice before the end of the year, with the first cut possibly coming in September.
Jamie Cox, managing partner of Harris Financial Group, even boldly predicted that the Federal Reserve might cut interest rates by 50 basis points in September to make up for its previous mistake of keeping rates unchanged. This expectation has provided strong support for gold, as gold, as a non-yielding asset, tends to perform better in a low-interest rate environment.
Weaker dollar and plummeting US Treasury yields
The dollar index posted its biggest drop since April
The weak employment data not only boosted expectations of rate cuts but also put significant pressure on the US dollar. On August 1, the US dollar index plummeted 1.39% to 98.68, its largest single-day drop since April. The weakening dollar directly reduced the opportunity cost of holding gold, pushing prices further up. Helen Given, director of trading at Money USA in Washington, said the labor market weakness exceeded expectations and the dollar's downward trend is likely to continue in the coming weeks, especially given expectations of a more dovish Federal Reserve policy.
U.S. Treasury yields fell sharply
Meanwhile, U.S. Treasury yields also fell sharply due to weak jobs data. The two-year Treasury yield fell 24.1 basis points to 3.710%, a five-week low, while the 10-year Treasury yield fell to 4.223%, its largest single-day drop since early April. The bullish steepening of the yield curve reflects strong market expectations of an imminent Federal Reserve rate cut. Chip Hughey of Truist Advisory Services noted that the Fed currently faces the dual dilemma of inflation and a slowing labor market. Rising expectations of rate cuts will further depress yields, creating a favorable environment for gold prices.
Tariff storm ignites safe-haven demand
Trump's tariff policy triggers market turmoil
US President Trump recently imposed steep tariffs on products from several trading partners, including Canada, Brazil, and India, with rates reaching 50%, 39%, and 25%, respectively. This has led to a global stock market plunge and a surge in risk aversion. While the US Treasury market has been relatively muted in response to the tariff news, gold, as a traditional safe-haven asset, has remained popular among investors in this context.
FXTM senior market strategist Lukman Otunuga noted that gold's rise benefited from the collapse of the US dollar, while the uncertainty brought about by tariff policies further strengthened the attractiveness of gold as an economic hedge.
Global economic uncertainty intensifies
Tariffs have not only driven up the price of imported raw materials but also caused the US manufacturing Purchasing Managers' Index (PMI) to contract for the fifth consecutive month, falling to 48.0 in July from 49.0 in June. Factory employment also hit a five-year low. The complex global economic environment, coupled with geopolitical tensions such as Israel's military operations in Gaza, Houthi drone attacks against Israel, and Ukrainian attacks on Russian defense-industrial complexes, has provided additional support for gold's safe-haven appeal. Faced with multiple uncertainties, investors are inclined to allocate funds to safe assets like gold.
The Fed's policy dilemma
Powell's Hawkish Strategy: Shift in Stance <br/>Earlier this week, Federal Reserve Chairman Jerome Powell stated that a September rate cut had not yet been decided, emphasizing that action would be based on economic data. However, weak employment data has cast doubt on the Fed's hawkish stance. Fed Governor Waller and Vice Chairman Bowman expressed concerns about a slowing labor market before the release of the jobs data, while other officials, such as Atlanta Fed President Raphael Bostic, have downplayed the data's impact, stating that it would not change the decision to maintain interest rates. This internal disagreement highlights the Fed's dilemma in balancing its dual goals of inflation and employment.
Upcoming data is crucial . August employment data (to be released on September 5) is widely expected to be a key indicator for the Federal Reserve's September 16-17 meeting. If the data continues to show labor market weakness, the likelihood of a rate cut will be further strengthened, providing further upward momentum for gold. Conversely, an unexpected rebound in economic data could temporarily suppress gold prices, but the overall bullish trend remains resilient in the current environment.
Technically bullish, gold prices aim for $3,400
Breakthrough of key resistance level
From a technical analysis perspective, gold's upward momentum is strengthening. FXTM's Lukman Otunuga stated that gold prices have broken through the resistance levels of $3,330 and $3,350. A weekly close above these levels would open the way for further gains to $3,400. The current price is only about 2% away from $3,400, demonstrating a strong bullish stance. Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, also believes that given the radical shift in expectations for rate cuts, gold is likely to reach $3,400 per ounce in the near term.
Potential Pullback Risk <br/>Despite strong bullish momentum, the market does carry some risk of a pullback. Otunuga warned that a break below $3,330 could trigger further declines, targeting $3,300 and the 100-day moving average. Investors should closely monitor key economic data in the coming weeks, particularly the August jobs report, as its results will directly impact the Federal Reserve's September meeting and, consequently, gold prices.
Summary and Outlook
The gold market's strong performance last week fully reflects the combined effects of a slowing US economy, a weakening US dollar, and global demand for safe-haven assets. Weak non-farm payroll data fueled expectations of a Federal Reserve rate cut, while the decline in both the US dollar and US Treasury yields provided strong support for gold prices. Trump's tariff policy further fueled risk aversion. Technically, having broken through key resistance, gold prices are expected to reach $3,400/oz in the short term, but investors remain wary of potential pullbacks.
Looking ahead, August employment data and the Federal Reserve's policy direction will be key catalysts for gold prices. Against the backdrop of growing global economic uncertainty, gold's appeal as a safe-haven asset is expected to further increase. Investors should closely monitor market dynamics and seize potential opportunities.
On this trading day, we need to pay attention to the monthly rate of U.S. factory orders in June and continue to pay attention to news related to the international trade situation and geopolitical situation.
(Spot gold daily chart, source: Yihuitong)
At 07:01 Beijing time, spot gold was trading at $3358.73 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.
