On Thursday (July 4th) in the Asian morning trading, spot gold fluctuated narrowly and is currently trading around $2358.30 per ounce. Gold prices rose more than 1% on Wednesday, reaching a nearly two-week high of $2364.83 per ounce and closing at $2355.92 per ounce during trading. This was due to recent US data showing a weak labor market, dovish Federal Reserve meeting minutes, and increased market bets on the Fed's September rate cut, causing the US dollar index to plummet to a nearly three-week low.

New York independent metal trader Tai Wong stated that "ADP and initial jobless claims data have strengthened the argument of 'economic weakness', which is likely to lead to the first rate cut in September and a rebound in precious and base metals across the board.". The bulls are trying their best to seize the opportunity before the weak non farm payroll report that many believe will be released on Friday.

The number of initial jobless claims in the United States increased last week, and the unemployment rate further rose to a new high in two and a half years at the end of June, consistent with the trend of the labor market gradually cooling down.

Due to a sharp decline in orders, a measure of US service industry activity fell to a four-year low in June, which may suggest that the economy lost momentum at the end of the second quarter.

After the data was released, the US dollar plunged to a nearly three week low, making gold more attractive to holders of other currencies, while the yield of the US 10-year treasury bond bond fell.

Currently, the market believes that the likelihood of the Federal Reserve lowering interest rates in September is 74%. The interest rate cut has reduced the opportunity cost of holding non yielding gold.

According to the minutes of the monetary policy meeting held on June 11-12, Federal Reserve officials acknowledged at the last meeting that the US economy seems to be slowing down and "price pressure is decreasing.".

This trading day is the Independence Day holiday in the United States, and the US market is closed. Trading in precious metal futures contracts under CME ended earlier than 02:30 Beijing time on July 5th. US economic data has been announced earlier than Wednesday, and market trading may be restricted.

Investors are now looking forward to the release of Friday's non farm payroll report to further clarify the path of interest rate cuts in the United States.

The US labor market is gradually slowing down, with the service sector PMI dropping to a four-year low in June

The number of initial jobless claims in the United States increased last week, and the unemployment rate further rose to a new high in two and a half years at the end of June, consistent with the trend of the labor market gradually cooling down.

The number of initial claims for unemployment benefits increased in June, initially due to the difficulty in eliminating seasonal fluctuations in the data after the Memorial Day holiday at the end of May. But as the number of people claiming unemployment benefits continues to rise at the end of the month, economists believe that the labor market may be slowing down. This, combined with the weakening of inflation, means that the Federal Reserve is expected to start cutting interest rates this year, and financial markets hope that the easing cycle can begin in September.

"Although the number of layoffs is still relatively low, we believe that the increase in initial claims for unemployment benefits reflects more workers applying for unemployment benefits, as they find it more difficult to find jobs as the pace of recruitment slows down," said Nancy Vanden Houten, Chief American Economist at the Oxford Institute of Economics

The US Department of Labor announced on Wednesday that in the week ending June 29th, the number of initial jobless claims in each state increased by 4000, seasonally adjusted to 238000. Due to Thursday being the Independence Day holiday in the United States, the report was released one day in advance. The economists interviewed originally estimated that the number of initial claims for unemployment benefits last week was 235000. The average number of initial claims for unemployment benefits increased by 2250 in four weeks, reaching 238500, the highest level since August last year.

Last week, the unadjusted number of applicants increased by 13049, reaching 238149. The number of initial weekly claims for unemployment benefits this year has risen to the upper limit of the range of 194000 to 243000, partly due to rising interest rates suppressing demand, leading to an increase in layoffs, and difficulty adjusting data to seasonal fluctuations during holidays.

The labor market is gradually cooling down, and the government reported on Tuesday that each unemployed person had 1.22 job vacancies in May, close to the average of 1.19 in 2019.

In addition, the ADP employment report released on Wednesday showed that private employment increased by 150000 in June, while it increased by 157000 in May. Economists interviewed previously predicted that private employment opportunities would increase by 160000.

The unemployment benefit report shows that in the week ending June 22, the number of people renewing unemployment benefits increased by 26000, reaching 1.858 million after seasonal adjustment, the highest level since the end of November 2021.

In June, ISM's Service Purchasing Managers Index (PMI) fell to a four-year low, which may suggest that the economy lost momentum by the end of the second quarter. The widening trade deficit further weakened the forecast for accelerated economic growth in the previous quarter

Federal Reserve Chairman Powell said on Tuesday that the United States is returning to a "downward trajectory of inflation", but decision-makers need more data to verify whether the recent decline in inflation rates accurately reflects the economic situation before lowering interest rates.

A survey released by the Institute for Supply Management (ISM) on Wednesday also pointed to a slowdown in the labor market momentum, showing that employment in the service industry declined for the sixth time in seven months in June. However, this survey measuring corporate sentiment is not a reliable indicator for predicting employment growth.

A survey of economists shows that the government is expected to release a report on the 190000 increase in non farm employment in June on Friday, compared to the 272000 increase in May. The unemployment rate is expected to remain unchanged at 4.0%.

The fourth report released by the U.S. Department of Commerce's Bureau of Economic Analysis on Wednesday showed that due to weak exports, the trade deficit increased by 0.8% in May, reaching $75.1 billion.

The trade deficit in goods expanded by 0.9% in May, reaching $100.2 billion, the highest since May 2022. After adjusting for inflation, the trade deficit in goods increased by 0.5% to reach $94.5 billion.

In the first quarter, trade dragged down the gross domestic product, resulting in an annual growth rate of only 1.4% compared to the previous quarter. The economic growth rate from October to December last year was 3.4%. It is expected that the economic growth rate in the second quarter will be about 2%.

Conrad DeQuadros, Senior Economic Advisor at Brean Capital, said, "All of this creates favorable conditions for a moderate relaxation of monetary policy restrictions in the second half of this year, and we still expect two 25 basis point rate cuts in September and December.".

The US dollar plummeted sharply after weak US data was released

The US dollar fell 0.33% on Wednesday to close at 105.34, with the lowest point hitting 105.04 during the day, a new low since June 13th. A series of previously released US economic data fell short of expectations, enhancing expectations that the Federal Reserve may start cutting interest rates later this year.

Jonas Goltermann, Deputy Chief Market Economist at Kaitou Macro, wrote in a report after the data was released on Wednesday, "Compared to other major economies, the unexpected economic data in the United States is lower than expected and basically coincides with a period of US dollar weakness. Overall, we believe that the next major trend of the US dollar will be a decline. We predict that the (US dollar index) will be around 106 by the end of this year, close to its current level, and then drop to 98 by the end of 2025."

The weak US service industry report released by the Institute for Supply Management (ISM) has further put pressure on the US dollar. Data shows that the Purchasing Managers' Index (PMI) for the US service industry has dropped from 53.8 in May to 48.8, hitting a four-year low. This is the second time this year that the index has fallen below 50, indicating a contraction in the service industry. US factory orders unexpectedly decreased by 0.5% in May, with an expected increase.

The yield of US 10-year treasury bond bonds also weakened on Wednesday, and the opportunity cost of holding gold declined. "The economy seems to have weakened at the end of the quarter," said Bill Adams, Chief Economist of Comerica Bank.

The yield on the US 10-year treasury bond bond fell 7.7 basis points to 4.359% on Wednesday. The 30-year treasury bond bond yield fell 8 basis points to 4.529% on Wednesday.

After a series of US data releases, according to calculations by the London Stock Exchange Group (LSEG), the US interest rate futures market believes that the likelihood of a September rate cut has increased from 69% late Tuesday to 74%. The market also believes that interest rates will be lowered twice in 2024.

The minutes of the Federal Reserve meeting are also slightly dovish overall, dragging down the performance of the US dollar index and providing support for gold prices.

Federal Reserve Meeting Minutes: Federal Reserve officials believed at the last meeting that price pressures were decreasing

According to the minutes of the two-day monetary policy meeting held on June 11-12, Federal Reserve officials acknowledged at the last meeting that the US economy seems to be slowing down and "price pressures are easing," but still recommended adopting a wait-and-see attitude before committing to interest rate cuts.

The meeting minutes released on Wednesday specifically pointed out that the weak Consumer Price Index (CPI) in May was one of the "series of developments in the product and labor markets," supporting the view that inflation is declining.

However, "they anticipate that lowering the federal funds rate target range would be inappropriate until more information becomes available to make them more confident that inflation is sustainably moving towards the 2% target."

The meeting minutes indicate that although there are signs that the economy is moving towards a slowdown in growth and a reduction in price pressure, there is no need to take this measure as there has been only mild improvement so far.

The vast majority of participants believe that the growth of economic activity seems to be gradually cooling down, and most participants indicate that they believe the current policy stance is restrictive, which may further suppress the economy and inflation.

According to the meeting minutes, when voting to stabilize policy interest rates in the range of 5.25% to 5.50%, "participants pointed out that progress in reducing inflation this year was slower than their expectations in December last year." Some participants emphasized the need for patience before lowering interest rates, and "multiple participants" mentioned that if inflation rises again, further interest rate hikes may be necessary.

The data released on June 12th showed that the month on month CPI in May did not rise at all, which is an encouraging progress that is long overdue for the Federal Reserve's policy review. Some market participants were surprised that the Federal Reserve's forecast released at last month's meeting did not reflect more favorable data.

During his speech at the European Central Bank meeting in Portugal on Tuesday, Federal Reserve Chairman Powell described his cautious attitude towards formulating monetary policy when predicting the path of price pressure.

"We just want to understand that the data we see reflects the actual situation of core inflation," Powell said. "Before we begin to relax policies, we hope to be more confident that the inflation rate is continuing to decline towards 2%."

At the June meeting, in addition to maintaining interest rate stability, decision-makers also postponed the expected start of interest rate cuts. New forecasts show that the median expectation of Federal Reserve officials is to only cut interest rates once this year by 25 basis points, while at the March 19-20 meeting, the expectation was to cut interest rates three times by 25 basis points each time.

The Federal Reserve will hold its next policy meeting from July 30th to 31st, and it is expected to maintain its benchmark interest rate unchanged at that time.

At that time, decision-makers will receive the latest information on the labor market. The June employment report will be released this Friday, the June CPI will be released on July 11th, and the initial valuation of the second quarter economic growth will be released on July 25th.

Biden vows to continue his campaign and tirelessly appeases senior members of the party. Polls show that Trump's lead over Biden is expanding

Investors are also paying attention to news related to the US election.

On Wednesday, US President Biden pledged to continue running for the presidency in 2024 during a phone call with members of his campaign team, and attempted to reassure Democratic leaders on Capitol Hill that despite his disappointing performance in last week's debate, he is still eligible for re-election.

According to two sources familiar with Biden's campaign team, Biden held a conference call with concerned members of the team and told them that he would not withdraw.

"I want to continue running," Biden said, adding that he remains the leader of the Democratic Party and will not be excluded, a source said.

Biden will meet with the Democratic governor at 6:30 pm Eastern Time on Wednesday to assure them that he will still be able to serve as the Democratic representative despite his poor performance in the debate with Republican Trump. Some governors will attend the meeting through virtual means.

On Wednesday, when asked if Biden was considering withdrawing from the campaign, the White House spokesperson asked Pierre, "Absolutely not.".

Shortly after her speech, two national polls showed that since the first debate, Biden's chances of winning against Trump have decreased. A survey by The Wall Street Journal found that Trump led Biden by 48% to 42%, expanding his lead by one percentage point, while a New York Times/Siena poll found that Trump's lead over Biden expanded by three percentage points, reaching 49% to 43%.

Democrats in the House of Representatives will hold a conference call on this issue at 5pm on Wednesday, and the second Democratic Congressman, Ra ú l Grijalva of Arizona, is calling on Biden to withdraw from the race. Other Democrats who are concerned about Biden's competitiveness in the November election will closely monitor this weekend's interview with ABC.

A White House official said that Biden had a conversation with House Democratic leader Hakeem Jeffries on Tuesday and Senate Democratic leader Schumer on Wednesday. On Wednesday, he also had a conversation with Jim Clyburn, a Democratic member of the House of Representatives. Clyburn's office stated after the conversation that they had a long private conversation.

Clyburn is the "king maker" within the Democratic Party and has made significant contributions to Biden's victory in the 2020 election. He told CNN on Wednesday that if Biden withdraws, the Democratic Party should hold a "small primary", making him the first senior legislator to openly discuss how to find a party candidate to replace him.

Clyburn stated on Tuesday that if Biden withdraws, he will support Vice President Kahlis as the presidential candidate.

Biden has yet to show any signs of giving up his bid for re-election. If the pressure to demand Biden's abdication increases, some governors are potential competitors of Biden, but many of them also speak on behalf of Biden during the campaign.

Multiple sources told Reuters that if Biden really withdraws, Harris is a possible successor. However, Michigan Governor Gretchen Whitmer, California Governor Gavin Newsom, and Illinois Governor J B. Pritzker、 Pennsylvania Governor Josh Shapiro and Kentucky Governor Andy Beshear have both been mentioned that if Biden decides to withdraw from the 2024 election, they may replace him as Democratic candidates.

Future prospects

There is limited economic data on this trading day, and investors need to pay attention to the geopolitical situation and news related to the UK election, as well as market expectations for changes in the US non-farm employment report.

On Wednesday, the day before the polling station opened, the Conservative Party in the UK almost admitted its election defeat to the Labour Party led by Keir Starmer and warned that the opposition was about to achieve a record breaking victory.

Polls show that the center left Labour Party will win a landslide victory in Thursday's vote, ending the Conservative Party's 14 year rule and handing over the key to the Prime Minister's office at 10 Downing Street to Stammer on Friday morning.

The final seat forecast released by You Gov on Wednesday shows that the Labour Party is expected to win a majority of 212 seats, making it the party with the most seats won in modern history.

Both Stamer and Conservative Prime Minister Sunak warned voters on the last day of the campaign before the vote that if the other party wins, it will bring terrible economic consequences. But facing the worst outcome prediction in the history of the Conservative Party, the party will shift its focus to minimizing losses as much as possible, stating that they need to retain enough seats to effectively oppose the Labour government.

Conservative Secretary Mel Stride told the British Broadcasting Corporation (BBC), "I completely agree that the current poll results mean that the Labour Party is likely to gain an overwhelming majority of seats tomorrow, the largest number of seats in the country's history. Therefore, what matters now is what kind of opposition we have and what kind of ability we have in parliament to monitor and balance the government." When asked about Stride's comments, Sunak told ITV, "I am working hard to get every vote."

The British Sun published an editorial online on Wednesday, supporting the Labour Party and Stamer: "It's time to make a change." The newspaper stated, "The insurmountable problem facing the Conservative Party is that they have become a divided and divided mob in the often chaotic governance process of the past 14 years, more interested in confronting each other than governing the country." Since 2010, the newspaper has supported the Conservative Party in every election.

The Labour Party's final campaign campaign campaign focused on concerns that voters would consider the election results to be a foregone conclusion, staying at home during Thursday's voting period or voting with small parties to express protest.

Stamer said that Stride's remarks were an attempt to lure wavering voters not to vote after the start of the 14:00 vote. He said, "What I want to say is that if you want to change, you must vote in favor. I hope people can participate in the change. I don't think anything is taken for granted.".

technical analysis

At the daily level, the MACD gold cross runs and the KDJ gold cross runs. Gold prices have broken through the key position of the 55 day moving average, and the short-term bullish signal has increased. Currently, it has risen to near the Bollinger Line track, and the resistance at the high point on June 21 is also near this position. If it breaks through the resistance near 2369.82 on the Bollinger Line track, it is expected to open a new upward channel. Pay attention to the support near the 55 day moving average 2338.64 below. If it unexpectedly falls below this level, it will weaken the bullish signal in the future.