Gold faces short-term pressure from NFP, but…

4 July 2025

Gold Faces Short-Term Pressure From NFP, But Macro Uncertainty Continues To Provide Support

Written by Linh Tran, Market Analyst at XS.com

In yesterday’s trading session, gold experienced a notable pullback, falling to around $3,312/oz, reflecting the market’s immediate reaction to stronger-than-expected U.S. labor data. Specifically, the Non-Farm Payrolls (NFP) report showed the U.S. economy added 147,000 jobs in the month—well above the forecast of 111,000—while the unemployment rate unexpectedly declined to 4.1%. These figures underscore the resilience of the labor market and have reinforced expectations that the U.S. economy remains stable, rather than edging toward recession.

This reaction is even more significant when contrasted with the ADP employment data released earlier on Wednesday, which disappointed with a decline in private sector jobs. The market’s swift shift in sentiment following the NFP release highlights how sensitive investors currently are to any economic signals, especially as they look for clues about the Federal Reserve’s upcoming policy direction.

However, from a more cautious perspective, it’s important to note that while the NFP beat expectations, it does not point to an overheated economy. Instead, it reflects a relatively stable pace of growth—insufficient on its own to force the Fed to alter its current dovish-leaning stance. This helps explain why, despite short-term selling pressure, gold has not undergone a significant trend reversal.

Another critical factor to consider is the upcoming expiration of the 90-day tariff suspension between the U.S. and its trade partners, particularly China, which is set to end early next week. The lack of clarity from the White House—especially amid ongoing political negotiations surrounding the budget and trade policy—continues to weigh on investor confidence. This unresolved policy risk has yet to be fully priced into gold and may act as a stabilizing force in the short term, limiting the extent of downside pressure.

Moreover, markets are still pricing in a strong likelihood that the Federal Reserve will move forward with an interest rate cut at the September meeting, particularly if upcoming data—such as CPI, PPI, and consumer spending—continues to show signs of weakening. This reinforces gold’s appeal as a defensive asset in an environment where real interest rates are likely to decline.

Taken together, gold currently sits at the intersection of two opposing forces: on one hand, pressure from stronger economic data; on the other, unresolved policy risks and growing expectations of monetary easing. This tug-of-war has made it difficult for gold to break out decisively in the short term, yet it also limits the potential for a sharp decline without a new negative catalyst.

Following its rebound from yesterday’s session low, gold is likely to continue trading within a narrow range in the near term, awaiting clearer signals from monetary policy decisions, tariff developments, and geopolitical risks. Should uncertainty persist and the Fed maintain a dovish tone, conditions will gradually align for gold to recover further and potentially retest key resistance levels over the medium term.

 

Zaid Barem / ymm