Main Quotes Calendar Forum
flag

FX.co ★ XAU/USD, GOLD

back
Trader Journals:::2025-07-07T02:05:31

XAU/USD, GOLD

Gold prices (XAU/USD) experienced a downturn in early Asian trading on Monday, attracting sellers and reaching around the $3,320 level. This gradual decline in the precious metals value can be primarily attributed to the implications of the stronger-than-expected U.S. non-farm payrolls (NFP) report for June, which has significantly altered the Federal Reserves monetary policy outlook. Traders are now keenly awaiting the release of the Federal Open Market Committee (FOMC) meeting minutes later on Wednesday, hoping for further clarity and potential support for gold. The June U.S. non-farm payrolls data surpassed market expectations, with payrolls increasing by 147,000, up from the revised 139,000 in May. Concurrently, the unemployment rate held steady at a low 4.1% in June. These robust employment figures point to a continued resilience in the U.S. labor market, effectively reducing the perceived urgency for the Federal Reserve to implement near-term monetary easing, such as interest rate cuts. A stronger U.S. economy, as indicated by these jobs numbers, allows the Fed more room to maintain a tighter monetary policy, which, in turn, supports the U.S. dollar. A stronger dollar typically exerts selling pressure on non-yielding assets like gold, as it makes gold more expensive for holders of other currencies and reduces its appeal as a safe haven against currency devaluation. The CME FedWatch tool, for instance, showed a substantial shift in rate cut probabilities, with the likelihood of a July reduction plummeting to less than 5% after the NFP report.

XAU/USD, GOLD

However, golds potential downside may be limited by a renewed escalation of geopolitical tensions in the Middle East. Late on Sunday, Israel announced that its military had conducted strikes on Houthi targets in Yemen, specifically at three ports and a power station. Israeli Defense Minister Israel Katz confirmed the attacks, stating they were in response to repeated assaults on Israel by the Iran-backed Houthi rebels. Any signs of further escalation in this volatile region could swiftly trigger a flight to safety among investors, spurring safe-haven flows into assets like gold. Historically, gold has served as a reliable hedge against geopolitical risks and economic uncertainty, and a deepening conflict would likely boost its appeal. Furthermore, gold traders will be closely monitoring developments concerning U.S. tariff policy. CBBC reported on Sunday that U.S. Treasury Secretary Scott Besant indicated that if no substantial progress is made on trade deals, U.S. President Donald Trump plans to send letters to some trading partners, warning that tariffs could revert to their April 2nd levels on August 1st. These renewed trade tensions, particularly if tariffs are reimposed or escalated, could inject significant uncertainty into global markets. Such uncertainty often prompts investors to seek the perceived safety of gold, potentially pushing prices higher in the short term, regardless of the Federal Reserves stance. The confluence of these factors – central bank policy expectations, geopolitical developments, and trade policy – will be critical in determining golds trajectory in the coming days.
photo
Forum user
Share this article:
back
loader...
all-was_read__icon
You have watched all the best publications
presently.
We are already looking for something interesting for you...
all-was_read__star
Recently published:
loader...
More recent publications...