Gold held steady this week as markets weighed strong US job data against rising concerns over fiscal policy and global tensions. While economic strength can pressure gold, safe-haven demand remains supported by uncertainty.

Gold holds on uncertainty

Gold prices hovered close to $3,328 per ounce on Friday, largely unchanged from the previous day, as investors digested conflicting macroeconomic signals.

The precious metal is poised to end the week with a 1.7% gain, buoyed by ongoing geopolitical tensions and fiscal uncertainty – despite strong US employment figures limiting further upside momentum.

A major catalyst this week was the approval of President Trump’s expansive tax and spending legislation, which passed through Congress on Thursday.

While the policy is designed to stimulate economic activity, it has sparked fresh concerns over rising US debt and the long-term implications for public finances.

Markets viewed the bill as both inflationary and destabilising in the longer term – factors that tend to support demand for gold as a safe-haven asset.

Jobs data solid, but rate cut expectations persist

US non-farm payrolls rose by 147,000 in June, exceeding forecasts, while the unemployment rate unexpectedly dipped to 4.1%.

Ordinarily, such robust labour market performance would weigh on gold, as it strengthens the US dollar and drives Treasury yields higher.

However, investors appeared to interpret the data as less hawkish than expected.

Fed funds futures now reflect a 50 basis point rate cut beginning in October, suggesting markets still anticipate monetary easing.

While an immediate shift in policy looks unlikely, softer data or subdued inflation could prompt the Federal Reserve to act.

Historically, lower interest rates tend to benefit gold, which does not yield interest and becomes more attractive in low-rate environments.

Technical analysis: Bullish trend breaks down

Gold (XAU/USD) saw sharp intraday volatility, falling from a high of 3365.76 to a low of 3311.68 before settling near 3328.43.

This move marked a clear breakdown of the prior bullish structure, with the price now trading below the 5, 10, and 30-period moving averages.

The shallow rebound from intraday lows indicates limited bullish conviction.

Picture: Gold retreats below 3355 as Fed hawks weigh, as seen on the VT Markets app.

Meanwhile, the MACD histogram remains negative, although its lines are beginning to converge – potentially signalling a base formation, though no firm reversal has been confirmed.

Resistance is now seen at 3355.96, the site of a prior breakout, while immediate support is near 3311. A break below that level could open the path toward 3300.

Geopolitical risks and tariffs continue to underpin gold demand

Further safe-haven demand was fuelled by renewed trade tensions after Trump announced that tariff enforcement letters would start going out on Friday.

This move suggests a shift away from negotiation and towards implementation, rekindling fears of a global trade slowdown.

In parallel, Trump’s recent call with Russian President Vladimir Putin reportedly failed to produce any progress on the Ukraine issue, keeping geopolitical tensions elevated.

Russia’s statement that it would continue to address the “root causes” implies a prolonged period of uncertainty.

Against this backdrop, gold remains an attractive hedge against both political instability and economic risk.

Unless there is a significant rise in Treasury yields or a more hawkish shift from the Fed, safe-haven flows are likely to continue into the coming week.

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