- Gold holds losses as labour market resiliency and stronger services PMI support the Fed’s ‘higher-for-longer’ narrative.
- Risk appetite improves on hopes of a EU-US trade deal, global equities rally weighs on bullion.
- XAU/USD momentum stabilises near neutral territory, suggesting that bulls may be losing steam below $3,400.
Gold is extending losses for a second straight session on Thursday, pressured by a shift toward risk-on sentiment and a decrease in safe-haven flows.
At the time of writing, XAU/USD is hovering above $3,360, retreating from recent highs near $3,457 on renewed hopes of an EU-US trade deal ahead of the August 1 tariff deadline.
On the data front, weekly Initial Jobless Claims fell to 217,000, coming in softer than expectations of 227,000 and signaling continued labor market strength.
Continuing Claims also came in slightly below forecast at 1.955 million, though still marginally higher than the previous week’s 1.951 million.
The trend of lower-than-expected jobless claims in recent weeks has reinforced expectations that the Federal Reserve (Fed) may maintain elevated interest rates. This is supporting US Treasury yields and the US Dollar, both of which are typically bearish for non-yielding assets like Gold.
Meanwhile, the S&P Global flash Purchasing Managers’ Index (PMI) data for July revealed diverging sector performance.
The Manufacturing PMI dropped sharply to 49.5, falling into contraction territory and missing forecasts of 52.5.
In contrast, the Services PMI jumped to 55.2 (vs. 53.0 expected), boosting the Composite PMI to 54.6 from 52.9, indicating strong growth in the services sector.
Against this backdrop, the market is increasingly considering the prospect of a more stable global trade environment.
According to the CME FedWatch Tool, markets are pricing in a 60% chance of a rate cut in September, with a 38% probability that rates will remain unchanged at the same meeting.
Gold daily digest market movers: EU-US remains a key driver of risk sentiment, influencing safe-haven bullion
- Speaking at an AI summit on Wednesday, US President Donald Trump commented on tariffs and trade.
- While Trump reiterated that countries would have a “simple tariff of anywhere between 15% and 50%,” he also stated that negotiations with the EU were “serious”.
- But risk appetite improved when Trump announced that, “If they agree to open up the union to American businesses, then we will let them pay a lower tariff.”
- German Chancellor Friedrich Merz also echoed optimism ahead of meetings with French President Emmanuel Macron in Brussels on Wednesday. Merz told reporters that, “We are hearing at this very moment that decisions may be forthcoming… We are meeting at a time that could not have been better.”
- The remarks hint at a more strategic and structured approach to trade, which has boosted investor optimism about the possibility of a deal.
- However, the European Union is still negotiating for key concessions, reportedly pushing for a baseline tariff of 15%. They are also seeking greater clarity on how sector-specific tariffs, such as those on pharmaceuticals, autos and semiconductors, would be applied.
- These sectors are considered critical to the EU economy, and Brussels is seeking assurances that they won’t face disproportionate penalties under any new US tariff regime.
Gold technical analysis: XAU/USD loses grip on breakout, $3,372 turns into resistance ahead of key data
Gold (XAU/USD) is trading around $3,363, extending losses after failing to hold gains above the key $3,400 level. The recent move has pushed the price below the 23.6% Fibonacci retracement of the April low-to-high move, which currently provides resistance at $3,372.
This breakdown puts the spotlight on support at $3,338, where the 50-day Simple Moving Average (SMA) and prior triangle resistance intersect.
A sustained move below this level would weaken the bullish structure and open the door toward the 38.2% Fibonacci retracement at $3,292, followed by $3,228 (50% Fibo level), both marking deeper correction zones.
On the upside, bulls need to reclaim $3,372 to shift short-term momentum back toward $3,400 and then $3,457, the recent swing high. A close above those levels would revive prospects for a move toward the April record high near $3,500.
The Relative Strength Index (RSI) at 52 continues to signal neutral momentum, suggesting Gold is consolidating ahead of critical macro data.
Gold daily chart
Read the full article here
