Gold: Risk-On Mood, Profit-Taking Threaten to Extend Pullback Before Jobs Test

• Gold lost momentum after failing to reclaim highs, despite dollar weakness and war de-escalation.
• Break below the 2025 trend line around $3295 puts bulls on the defensive near key supports.
• Tech rally and risk-on sentiment have weighed on haven demand, capping any upside for gold.
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Gold prices have fallen in the last couple of weeks, after being unable to hit new highs despite the renewed dollar selling. Prices slipped 2.8% last week, following the breakdown below $3,300 support on Friday. At the start of this week, however, prices bounced back a tad, though it remains to be seen where the metal will close the session, given the recent loss of bullish momentum.

As things stand, the metal looks set to finish off the month essentially flat after closing unchanged in May, too. The loss of bullish momentum has been triggered by a few factors, including profit-taking, but more to the point, it is undoubtedly reduced demand for haven assets thanks to the sudden de-escalation in the Middle East conflict.

While the long-term trend remains positive, in the near-term, some further weakness should not come as a surprise, particularly if stocks continue rising and the metal holds below a key bullish trend line it took out on Friday around $3295 area.

Gold Breaks 2025 Trend Line

Gold has broken its 2025 bullish trend line around $3295 area, making this a key level to watch today in terms of potential resistance.

Watch gold to see where it will end today. A close well above this trend would be a bullish technical development, as it would point to a false breakdown and another bear trap. In this case, the bullish reversal would be confirmed upon a break above the most recent local high of $3350, as that would potentially ignite fresh momentum on the long side, for it would invalidate the bearish reversal.

However, if gold holds below the broken trend line, then in this case, a deeper correction in early July would be a likely scenario. In this scenario, the levels to watch would include:

• $3,250, marking today’s low and horizontal support
• $3,200 – the next round handle
• $3,167 – the early April high, which was later reclaimed

Beyond the abovementioned levels, the next big support area is around $3,000 – this being a psychologically important handle. Will gold correct this far remains to be seen. But following the break of the bullish trend line and the loss of bullish momentum, I wouldn’t bet against the possibility of what some would consider a healthy correction.

Stocks Extend Rally, Causing Gold to Falter

Thanks to the sudden de-escalation in the Israel-Iran conflict, investors have rushed back to the racier tech sector, which helped to push the Nasdaq 100 to new highs last week, before the S&P 500 joined in.

Futures on the Nasdaq and indeed S&P 500 both hit new highs on Monday as Canada withdrew its digital services tax on technology companies to restart trade talks with the US, after Trump on Friday said he was ending all trade discussions with Canada in retaliation for the digital tax.

The rally in equity markets has weighed on the appeal of gold. The loss of haven demand has meant that, despite the latest leg down in the dollar, gold has not benefited from this at all. I reckon a bit of a pullback would not be too bad an outcome, as that will allow long-term technical overbought conditions on higher time frames to work off, allowing the metal to shine again when macro conditions are more favourable once more.

This week’s key US macro data, including the latest nonfarm jobs report should have at least some influence on the direction of gold prices.

What Lies Ahead for Gold This Week?

Markets will stay glued to US economic updates in the week ahead, though for as long as there is no major escalation again in the Middle East, you’d think gold may struggle to rally on macro data or events. Still, there is always room for surprises. The biggest catalyst for gold could be progress in trade talks – of a lack thereof – with the July 9 deadline looming. Anyway, here are this week’s key macro highlights to watch:

1. ECB Forum on Central Banking (Tuesday, 1 July)

Central bank heads, including Powell, Lagarde, Bailey and Ueda will speak on a policy panel in Sintra. Any dovish shift from these officials could provide some support for gold.

2. US JOLTS Job Openings (Tuesday, 1 July)

Job openings data has become a proxy for labour market health. A strong print could offer the dollar some relief; a weak one, and gold might regain some ground as the dollar comes under more pressure.

3. US Non-Farm Payrolls (Thursday, 3 July)

This is the big one. With ISM services and jobless claims also on deck the same day, this could be the make-or-break moment for July rate cut expectations. Another downward surprise, meanwhile, would further boost the appeal of gold.

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