Gold faces pressure amid US-Vietnam trade developments; US non-farm employment data becomes a key turning point

In the Asian session, gold prices (XAU/USD) experienced a pullback on Thursday, with the rebound momentum gradually fading near the monthly lows created earlier last week. The main factors driving this correction include progress in US-Vietnam trade negotiations, which eased market risk aversion sentiment. Meanwhile, the modest rally in the US dollar also exerted downward pressure on this traditional safe-haven asset.

However, from a deeper macroeconomic perspective, dovish expectations for the Federal Reserve still provide fundamental support for gold. Traders generally believe that the US central bank is about to initiate a new rate-cut cycle. The soft US private sector employment data released on Wednesday further solidified this expectation. The current market focus has shifted to the US non-farm payroll report, which will directly influence the Fed’s policy outlook and thus determine the short-term trend of non-yielding assets like gold.

Trade Negotiation Progress Brings Structural Changes

The Trump administration advanced trade negotiations with Vietnam this week, with the US imposing a 20% lower tariff on imports from Vietnam while securing tariff-free access to the Vietnamese market. This agreement alleviates tensions in the global trade environment, thereby reducing demand for safe-haven assets such as gold.

In parallel, India and the US are striving to reach a tax reduction agreement before July 9. However, negotiations with key trading partners like Japan remain stalled, indicating that trade uncertainties have not been fully eliminated and continue to provide some support for precious metals.

Labor Market Signals Spark Rate Cut Expectations

Recent signs of weakness have appeared in the US labor market. Automatic Data Processing (ADP) reported an unexpected decline of 33,000 private sector jobs in June, marking the first negative growth in over two years. This data echoes Tuesday’s job openings and labor flow survey, indicating a clear deterioration trend in the US employment market.

The soft employment environment may prompt the Fed to cut rates earlier. Currently, the market prices in about a 25% chance of a rate cut at the July monetary policy meeting, with nearly a certainty of a 25 basis point cut in September. Expectations for two more rate cuts this year are also prevalent. Such dovish outlooks should suppress the dollar’s rebound potential and provide a buffer for gold’s downside.

Technical Outlook: Bullish Setup Still Attractive

From a technical perspective, this week’s break above the 200-hour simple moving average (SMA) has become a key bullish trigger signal. The momentum indicator on the daily chart has turned positive again, suggesting that the immediate minor resistance remains upward. Therefore, any subsequent dips could be viewed as buying opportunities on dips, with key support expected around the $3,330–$3,329 zone (200-hour SMA).

If this support is effectively broken, it could trigger a wave of technical selling, pushing gold further toward the $3,300 round number. On the upside, the $3,363–$3,365 zone (last week’s high) constitutes direct resistance. A breakout above this range could target the $3,400 level. Sustained strength beyond this point would overturn recent negative sentiment and push XAU/USD toward the next significant resistance zone at $3,435–$3,440.

Outlook and Market Rhythm

Market participants are now focusing on the release of the US non-farm payroll report, which will be a key determinant for the Fed’s rate-cut path. Under the dual influence of positive risk sentiment and a modest dollar rally, gold faces short-term pressure. However, dovish central bank expectations and trade uncertainties continue to provide medium-term support. The technically bullish momentum structure still supports some buying on dips.