By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
As the U.S. labour market continues to be strong and the economy created more jobs than anticipated last month, the price of gold has dropped below $3320 (~Rs 96500), fighting to regain its footing. Last week, gold got off to a strong start and saw three days of gains before stalling when it became apparent that the US Federal Reserve was unlikely to lower interest rates anytime soon. Headlines about the US trade talks may influence Gold’s movement in the near future if there are no important macroeconomic data releases.
US President Donald Trump wrote a handwritten letter to Federal Reserve Chairman Jerome Powell requesting that he cut interest rates, White House press secretary Karoline Leavitt said. Trump, she added, thinks interest rates ought to be cut to around 1%. However, Fed Chairman Powell’s hawkish comments at the European Central Bank’s Forum on Central Banking helped the USD recover from the selling pressure and constrained the upside of gold. Powell reaffirmed that they will continue to be patient with policy easing as long as the US economy is strong and mentioned that they anticipate stronger inflation readings throughout the summer.
President Trump stated on Sunday that a dozen or more letters could be sent this week, as the 90-day freeze on so-called reciprocal tariffs is set to expire this Wednesday. In the meantime, during a ceremony on July 4th, Trump signed his “one big, beautiful bill” into law. The detrimental U.S. policy, which is undermining investors’ trust in secure U.S. assets, is a major factor in favour of gold.
With Treasury Secretary Scott Bessent speculating that negotiations could be prolonged to provide nations without a deal by July 9 an additional three weeks to discuss, many important US trading partners are rushing to complete agreements or get more time. However, President Donald Trump’s reaffirmation of warnings that countries who do not make agreements by the deadline would face greater tariffs and his confirmation that sweeping reciprocal duties will go into force on August 1, restricted the downside in gold.
In the meantime, investors expected US fiscal policy updates, as last week’s solid Employment report dampened hopes of a Federal Reserve rate cut in July. A potential agreement for a ceasefire in Gaza is allegedly getting closer to being accepted by Hamas. According to statements made earlier in the week by US President Donald Trump, Israel is prepared to accept a 60-day ceasefire and utilise that time to negotiate a final deal to end the conflict. Trump is scheduled to meet with Israeli Prime Minister Benjamin Netanyahu on July 6 to talk about the war. The initial response could cause gold to decline if markets begin the week with news of the Israel-Hamas war ending, even if only momentarily.
Gold Aug Futures Daily Chart
Gold prices are consolidating in a symmetrical triangle and waiting to give a breakout or breakdown on either side. $3300 (~Rs 96000) is strong support, while $3400(~Rs 98500) is strong resistance. Either side breach of these levels will provide 2-3% movement.
Silver Sep Futures Weekly Chart
Silver Sep is trading in a range of $35 (~Rs 105,000) and $37.5 (~Rs 108,500). The next target is $38 (~Rs 111,000), if this positive momentum continues above the ATH, while support lies at $35.5 (~Rs 104,000).
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