Gold may experience slight upward oscillation in the short term. Resistance levels are at 1976 and 1944,Elon Musk coin list while support levels are at 1913 and 1809. Furthermore, the underperformance of non-farm data could contribute to a gold rebound. Considering CFTC position data and technical analysis, gold is currently in a medium to long-term downtrend, but short-term consolidation with upward oscillation may continue.

Last week (3rd-9th July), precious metals experienced a general increase, but gold ended the week with the same percentage change as the previous week. Silver saw a marginal increase of 0.7% during the week. Gold remained under pressure below the 1914 level due to a sharp drop caused by the unexpectedly strong growth in US June ADP employment figures. However, gold quickly rebounded to a high of 1934 following disappointing non-farm payroll data and gradually settled around the 1928 level.

Source: MacroMicro July 03-09, 2023 Major Precious Metals Performance

On July 7th, the US Non-farm Payroll data for June was released, with the seasonally adjusted non-farm employment figure coming in at 209,000, below the market expectation of 225,000 and the previous value. It represents the smallest increase since December 2020. The US unemployment rate for June was 3.6%, in line with expectations and better than the previous value of 3.7%, while the labor force participation rate remained unchanged. Prior to this, the US ADP employment figures exceeded expectations, leading to market optimism about the non-farm payroll report. As a result, gold initially plummeted by $25. However, the actual non-farm data fell short of expectations and deviated significantly from the market's optimistic outlook. Consequently, the US dollar sharply declined, pushing gold up by $15.

Mitrade Analyst 

The lower-than-expected non-farm payrolls have slightly shaken market expectations for a July interest rate hike. According to FedWatch data, the probability of a rate hike in July decreased slightly from 93% on July 7th to 92.6%. This adjustment indicates that market investors have some concerns about the slowdown in the US labor market. Although this has had a certain impact on the US dollar, it does not pose a significant threat. Considering that the June unemployment rate in the US met expectations and was lower than previous values, combined with stronger-than-expected economic performance in the first quarter, gold's medium to long-term trend lacks substantial positive data support and may continue to decline.

Source: CME 

However, the upcoming release of US core inflation rate and the European Central Bank's monetary policy meeting minutes this week could cause significant volatility in gold. The US has seen persistent cooling of core inflation since September last year, with only a slight rebound in March that exceeded expectations. Based on past data, the core inflation rate in June is expected to continue cooling down to 5%. If so, gold may experience further oscillations and decline. However, if core inflation rebounds, it could provide short-term support for gold's rise. Nevertheless, this would subsequently accelerate expectations of two interest rate hikes this year, supporting a strong US dollar.

Source: MacroMicro US Core Consumer Price Index  

In addition, the release of the minutes of the European Central Bank's monetary policy meeting may further fuel hawkish interest rate expectations. Last month, the ECB raised rates by 25 basis points, reaching the highest level in 22 years. However, inflation in the eurozone remains high, indicating that the market generally maintains expectations of future rate hikes by the ECB. The release of the minutes may not be favorable for a gold rebound.

Recently, speculative long positions in gold have seen a significant increase. According to data from CFTC position updates, from June 27th to July 3rd, speculative long positions in gold increased by 11,187 compared to the previous period. During the same period, speculative long positions in gold futures open interest also saw a significant increase of 14,200, while short positions decreased by 3,013 compared to the previous period. These indications suggest that short-term market investors are gradually turning bullish on the future of gold.

Mitrade Analyst 

Based on the above, with speculative market longs gradually entering and a few aggressive long positions significantly increasing, gold may gradually turn bullish in the short term. Gold may experience fluctuations and rise alongside market news this week, so conservative investors should exercise patience and observe.

From a technical indicator perspective, the MA (60-day) long-term trend is currently in a downward direction with no signs of reversal. However, the 14-day RSI value of 45, although lower than 60, is showing an upward trend. At the same time, the MACD daily line, with the short-term line crossing above the long-term line, has generated a golden cross signal. The gap between the lines is gradually expanding, and the histogram is positioned above the zero line but relatively low. The DIFF and DEA values are negative, while the MACD is positive, indicating a short-term or continued consolidation of gold with slight rebound signals.

Resistance levels: 1944, 1976

Support levels: 1913, 1809

Source: Investing.com, 10 July Gold Daily Chart 

Mitrade Analyst 

Based on the analysis of various indicators, the medium to long-term trend of gold is downward, with a possibility of a slight rebound this week.

In addition, investors should pay attention to news and economic data that may provide guidance for the future direction of gold, such as the European Central Bank's monetary policy meeting minutes and key data points like the US June core inflation rate, consumer price index annual rate, and producer price index monthly rate.