Precious metals jumped 1%-2% higher yesterday as jobs numbers came in sharply below expectations, pressuring treasury yields and the dollar lower. In today’s session, gold is trading around $4,174, up 1.2%, while silver trades around $62, up 2.1%. The intraday bias turns moderately bullish.
The NFP report yesterday saw an addition of 57,000 new jobs in June, below forecasts of 110K. This reduced expectations for a rate hike by the Fed this year, creating headwinds for Treasury yields and the US dollar and benefiting precious metals. The swap market is now pricing in only an 18% likelihood of a rate hike at the next Fed meeting, down from a third earlier in the week.
From a technical standpoint, gold broke above the crucial resistance level at $4100 (near the 10-day EMA). A sustained hold above this level could indicate a near-term bottom for gold. The near-term resistance level appears around the 20-period EMA at $4,270 (4-hr chart). The subsequent resistance could be around $4,329 (200-day EMA). The momentum is likely to favour an upside in gold. On the flip side, support is likely around $4,100 (50-period EMA, 4 hr chart). A pullback to this level would be favourable for entering long positions. An ideal entry setup would be a failed breakdown at the $4,100 level with a close above the high of the low day (CAHOLD) in the next session. A break lower from here opens the door to a retest of support around $4,000.
Looking at silver, in the daily chart, it broke above the $60 resistance yesterday. A sustained hold above this level would be needed to favour further upside. Silver’s resistance is likely around the $63-$64 zone (20-day EMA). On the flip side, support could be around $58-$60. A pullback to these levels would be favourable for entering long positions. The entry setup remains similar to gold.
Gold prices in the UAE today are as follows:
24 Carat – AED 503.50
22 Carat – AED 466.25
21 Carat – AED 447.25
18 Carat – AED 383.25
WTI traded in a tight range yesterday and is hovering around $69.8 (+0.6%) in early Asian hours, while Brent is trading at $72.9 (-0.9%), as easing geopolitical tensions and improving oil flows through the Strait of Hormuz continue to weigh on crude prices. The market has now erased nearly all of its war-related gains, with Brent returning to pre-conflict levels.
Talks between the U.S. and Iran have raised hopes for a lasting deal, easing worries about long-term supply problems. Saudi Arabia has sped up exports through the Strait of Hormuz, sending 34 million barrels since June 17, which is more than twice the amount shipped during the conflict. UAE exports are also back to pre-war levels. More tanker traffic and the movement of previously stuck cargoes show that regional supply is returning to normal. However, discussions remain fragile with issues like Iran’s nuclear program, control of Hormuz, and possible transit fees still unresolved.
The market structure has also shifted into contango, signalling improving near-term supply conditions. With supply risks fading, traders are increasingly refocusing on market fundamentals, though any setback in negotiations could quickly revive the geopolitical risk premium.
From a technical perspective, WTI is expected to trade in a tight range, with immediate support near $67.3, and resistance at $71. Brent may find support near $70.9, with resistance around $73.5.
US Markets
Equity markets in the US faced pressure on Thursday, with the technology sector taking a larger hit as the NDX index dropped 1.64% while the SPX index only dropped 0.11%. Trading volumes and liquidity may remain muted today, as US markets are closed for US Independence Day. However, futures trading during Friday’s Asian session shows US markets stabilising with the SPX index rising 0.45% and the NDX index rising 0.95%.
It seems like a capital rotation is still underway, suggesting a cooling off in the red-hot semis and technology sector, as the major US indices seem to be moving in different directions. This is evident as the defensive Dow Jones jumped more than 1% while the S&P 500 and the Nasdaq 100 closed lower. What also affected market sentiment was the Nonfarm Payrolls report, which came in at 57K, well below the 114K expected, directly impacting the Fed’s interest rate policy and calming fears of immediate rate hikes. According to the CME FedWatch Tool, the odds of rates remaining stable by the September Fed meeting jumped from 35.8% to 46.2%, just about overtaking the odds of a 25-bps rate hike. Global indices are in the green today, with a jump in the tech-heavy Nikkei 225 and KOSPI suggesting some stability returning to semis, which could be influencing US equity futures positively.
From a technical standpoint, the SPX index is still trading near the upper band of a triangle pattern from the downward-sloping trendline connecting the highs of 2nd, 16th, and 30th June. This could be suggesting some level of price acceptance near the resistance, potentially gearing up for a breakout above the resistance. The NDX index, meanwhile, indicates a better bullish structure for the day, as it appears to be rebounding from an upward-sloping trendline on the daily chart connecting the lows of 11th June, 26th June, and 2nd July. Short-term buying momentum may accelerate upon a break above the 9- and 21-day EMAs, coinciding near the $29660 level.
US Dollar Index
The dollar index fell by almost 0.5% in yesterday’s session as traders reconsider hawkish Fed interest rate expectations, following the release of NFP data for June. The US economy created 57K fresh jobs, significantly lower than estimates of 110K. Also, the May data was revised lower to 129K from 172K. According to the CME FedWatch tool, the probability of a rate hike by year-end fell to 75% from 82% yesterday. Traders now see the Fed raising borrowing costs by a quarter point by December, down from October. With the index likely to close the week nearly 0.7% lower, market participants will monitor 2-year yields closely, as they are strongly correlated with the dollar, to predict the next trend. A fall below the 4.08% support level would be bearish for the index, while holding above this level could provide strong support.
Technically, the index is marginally down today and trading at 100.70. It is testing the critical support level at 100.68, which also nearly coincides with the 21-day SMA. The daily RSI is also trending downward towards the 50 level. A break and close below this level may indicate further bearishness for the index. The index may then test the ascending trendline support level at 100.34, as indicated by connecting the lows of 97.62, 99.38, and 99.52. However, if it holds the 100.68 level and crosses above the immediate resistance at 101.06, it may regain bullish momentum.
