Created
: 2025.08.04
2025.08.04 21:21
Gold (XAU/USD) kicks off the week on a cautious note, trading flat on Monday, as the US Dollar (USD) stabilizes in the aftermath of Friday's disappointing Nonfarm Payrolls (NFP) report. At the time of writing, the yellow metal is hovering near $3,370 during European trading hours, with traders largely remaining on the sidelines amid fragile sentiment.
July's jobs report delivered a clear downside surprise. The data has meaningfully increased the likelihood of a rate cut at the Federal Reserve's (Fed) next monetary policy meeting in September -- a shift in sentiment after markets had recently scaled back expectations following last week's Fed decision to hold interest rates steady.
Despite the renewed dovish tilt in rate cut expectations, Gold's upside remains limited for now. US Treasury yields have stabilized after Friday's sharp decline, acting as a headwind and capping bullish momentum in the non-yielding metal.
However, growing concerns over political interference are adding a layer of caution to the market mood. US President Donald Trump abruptly fired Bureau of Labor Statistics (BLS) Commissioner Erika McEntarfer on Friday. Trump accused the BLS head of falsifying employment data after the July jobs report showed a steep slowdown in hiring and sharp downward revisions to previous months, all without providing any evidence.
President Donald Trump questioned the credibility of the latest jobs report, alleging that the figures were produced by a "Biden appointee" in an effort to make him and Republicans look bad. The move has sparked widespread criticism from economists and former officials, raising concerns over the credibility of future US economic data and the independence of core institutions. This political uncertainty is adding a layer of caution to the broader market tone and is helping to limit Gold's downside for now.
Gold (XAU/USD) is struggling to extend its recovery after last week's bounce, with price action hovering near $3,370 at the time of writing. Last week, Gold broke below an ascending triangle pattern and briefly touched a one-month low. However, the downside lacked momentum, and prices found support just above the 100-day Simple Moving Average (SMA), signaling that bears are not yet in full control. As of now, the metal is hovering just above the 50-day SMA, which now serves as immediate support, followed by the 100-day SMA. A sustained move lower could open the door toward $3,275 and even $3,200.
The Relative Strength Index (RSI) is neutral around 53, indicating a lack of strong momentum in either direction. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator remains below the zero line, though the histogram is showing early signs of flattening, hinting at reduced bearish pressure for now.
If bulls manage to reclaim the broken triangle base and push above $3,370, a retest of the upper boundary near $3,450 could be on the cards, bringing the all-time highs back into focus.
Gold has played a key role in human's history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn't rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country's solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Created
: 2025.08.04
Last updated
: 2025.08.04
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