gold prices experienced a temporary pause after an initial recovery rally as trading commenced at the start of the week. The precious metal’s fluctuations are largely influenced by the recent geopolitical and economic developments emanating from the United States.
On Friday, the release of the US Nonfarm Payrolls (NFP) data revealed a significant deterioration in the labor market, adding only 73,000 jobs in July, far below the expected 110,000. The unemployment rate edged higher to 4.2%, reigniting concerns over the resilience of the US economy. This data prompted a marked reassessment of Federal Reserve policy expectations, with markets now pricing in an approximately 80% probability of a rate cut in September, a notable increase from pre-NFP levels.
This dovish shift contributed to a decline in US Treasury yields and a weakening of the US dollar, which in turn supported gold ’s rebound. The precious metal regained key averages on technical charts, with market sentiment increasingly favoring bullish positioning. The 14-day Relative Strength Index (RSI) is hovering above the midpoint, suggesting that upward momentum could persist, especially if key moving averages align favorably, such as the potential bullish crossover of the 21-day and 50-day Simple Moving Averages.
Resistance levels are identified around $3,380, the previous rising trendline support, with further targets at $3,400 and $3,440 should buying pressure sustain above the immediate threshold. Conversely, critical support resides near the confluence of the 21-day and 50-day SMAs at approximately $3,342, with a move below this support opening a pathway towards $3,300 or lower. The 100-day SMA at $3,275 represents an ultimate line of support for bullish traders.
gold continues to be viewed as a vital safe-haven asset, especially amid ongoing geopolitical tensions, tariff negotiations, and concerns over US economic health. Its role as a hedge against inflation and currency devaluation underscores its importance in diversification strategies. Central banks have remained major buyers, increasing gold reserves significantly in recent years as part of their broader monetary calibers aimed at fortifying economic stability. The inverse relationship with the US dollar and treasury yields remains a key factor in gold ’s pricing, with fluctuations often tied to broader market sentiment and geopolitical risk perceptions.
