Gold prices are on the rise again, expected to increase by over 1.50% this week. This movement is mainly due to a weaker US dollar and low trading activity following the US Independence Day holiday. Trade tensions have also contributed to the increase, with XAU/USD trading at $3,333, reflecting a rise of 0.26%. Starting in August, a range of tariffs from 10% to 70% will be enforced as the US plans to send trade letters to various countries. This could affect gold prices, with around 100 nations facing at least 10% tariffs. The Federal Reserve’s decision to keep rates steady has somewhat slowed gold’s growth.

US Labor Data and Global Affairs

US labor data is looking solid, with government hiring boosting numbers, although private sector growth is slowing to its lowest point in eight months. Geopolitical tensions persist, with no progress in US-Russia talks regarding Ukraine, even as the US has offered air defense support to Ukraine. Next week will feature important economic reports, including FOMC minutes and jobless claims. High US Treasury yields, with the 10-year yield ending at 4.338%, have also limited gains for gold. A potential tax bill extension could increase the national deficit by $3.4 trillion. Recent data showed that nonfarm payrolls were higher than expected and the unemployment rate dipped slightly. A strong labor market, indicated by decreasing initial jobless claims, raises hopes for possible monetary easing in the future. Gold prices are trending upwards but still below the recent peak of $3,452. For further increases, gold needs to break above $3,400. Conversely, a fall below $3,300 could lead to a target of $3,246 or lower. Gold is viewed as a safe haven amid economic uncertainty, with its prices linked inversely to the US Dollar and Treasury yields. Gold regained its upward momentum this week, largely due to the weaker US dollar. The trading volume is thin after the July 4 holiday, which can exaggerate price movements triggered by external factors. Rising tensions over potential tariffs and complicated trade discussions helped boost gold prices. The main driver behind this shift is the proposed tariff system from Washington. Tariffs of 10% to 70% are expected to take effect by August, impacting about 100 countries and potentially causing economic challenges. While these tariffs may hinder traditional markets, they could provide support for gold in the short term. The Federal Reserve’s policies are holding back bullish sentiment in metals, as they have not made significant moves to cut rates. Although some improvements in labor segments are noted, slow wage growth and private sector hiring declines are concerning. The public sector is compensating, but this does not provide a complete picture of job market health. Tensions with Russia remain unresolved. Although there are no diplomatic breakthroughs, the US continues to support Ukraine with military assistance. In times of conflict, safe-haven assets like gold typically gain support, which aligns with the recent rise in gold prices.

Upcoming Economic Releases and Market Indicators

Next week brings several critical economic events. The FOMC minutes will reveal discussions behind recent policies, while weekly jobless claims could either boost confidence in the labor market or spark debates over short-term rate direction. Currently, the 10-year yield is just above 4.3%, limiting excitement for further gold gains due to its inverse relationship with gold prices. A discussion is also ongoing about fiscal policy, particularly an extension of tax cuts, which could inflate national deficits significantly. This wider economic picture often links to metal pricing. Traders should keep in mind that public debt trends and inflation expectations can affect hedging into precious metals. Recent job growth is promising, with nonfarm payrolls surpassing expectations and a surprise decrease in unemployment. However, shorter-term metrics like initial jobless claims, which have been gradually dropping, can shift market sentiment before broader trends emerge. Gold remains in a rising trend but is currently pressured below its recent high. It needs to clearly break through $3,400 to target new highs. This level isn’t just psychological; it’s also a significant resistance area from the previous rally. A drop below $3,300 could lead to previous support levels coming into focus, with $3,246 being the first significant test. Gold prices are still heavily influenced by the strength of the dollar and Treasury yields. As yields rise, gold prices have paused. Renewed interest in Treasuries could limit gold’s upside, while a weaker dollar would have the opposite effect. For now, we await whether trading volume picks up after the holiday and if any major report or political event leads to clearer direction for the market. Create your live VT Markets account and start trading now.

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