Toward the end of trading this week on Friday, gold soared, climbing nearly 1.5%. This increase came despite a string of disappointing labor data released out of the United States. As economic uncertainty looms, investors are turning to safer investments now more than ever. This big increase follows a big fat zero in net job growth reported for July. Recent developments have led us to be more wary about the strength of the labor market. They’ve further nudged up expectations for how soon and by how much the Federal Reserve might cut interest rates.
The U.S. Department of Labor reported that job growth for July fell short of analysts’ predictions, while upward revisions to the previous month’s numbers indicated even weaker performance than initially thought. In addition, the unemployment rate ticked up, reflecting a cooling of the labor market. These ongoing unknowns have caused a wave of uncertainty with traders, causing a new flight to quality towards safe-haven assets such as gold.
With the escalating geopolitical tensions and uncertain economic environment, gold safe haven demand has soared. With fears of an upcoming market crash and recession looming large, investors are seeking shelter in the precious metal’s safe-haven asset. The new round of higher tariffs, initiated by President Trump, has driven the crisis even deeper. This move has raised the stakes on uncertainties related to trade relations and economic stability.
Analysts are already warning that gold’s rally is in danger. Otherwise, if it can’t hold its bullish move and breakout within the triangle structure it has created, it could trigger more downside potential. At the moment, gold’s 14-day momentum indicator is sitting at the centerline, indicating a potential tug-of-war along with price direction. Gold finds it difficult to push past pivotal resistance lines drawn by the daily Tenkan and Kijun-sen indicators. This reality indicates that additional advances will face serious headwinds.
Traders have identified important resistance points at 3353, 3361, 3373, and 3398. On the downside, they watch support levels at 3340, 3325, 3308, and 3300. The recent rally has more than made up for Wednesday’s 1.6% drop, a huge, sharp decline in its own right, demonstrating gold’s strength even during left-to-right market chaos. Prices are still above the broken Fibonacci level of 38.2% at $3325. This still implies a near-term bullish sentiment bias.