On Friday (July 5th), in the early trading session of the Asian market, spot gold'>gold fluctuated narrowly and is currently trading around $2356.47/ounce. Thursday was a strong Independence Day in the United States, and gold'>gold prices were closed early in the previous trading day, maintaining a narrow range of volatility and closing at $2356.80 per ounce, with a candlestick chart on the candlestick chart. On this trading day, the US June employment report will be released, and the market's wait-and-see sentiment is increasing.

Due to the poor performance of the latest US May ADP and initial jobless claims data, the market generally expects the US job market to slow down, which is expected to provide support for gold'>gold prices before the data is released. However, Israel will send a delegation to negotiate a hostage release agreement with Hamas, which concerns the geopolitical situation; The data on job vacancies in the United States has shown strong performance, and even if non farm performance is poor, there may still be a possibility of buying expectations and selling facts, so one still needs to be cautious of the possibility of a significant drop in gold'>gold prices.

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. 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.

According to the FedWatch Tool of the Chicago Mercantile Exchange, the market currently believes that the likelihood of the Federal Reserve lowering interest rates at its September meeting is 73%.

Matt Simpson, senior analyst at City Index, said, "The weaker than expected ISM services report was a gift that the Fed's dovish faction had been waiting for before the release of non farm payroll data. If the non farm payroll data confirms the economic cracks we see elsewhere, then gold'>gold prices could potentially rise to $2400."

In addition, on this trading day, attention should also be paid to the speeches of the FOMC Permanent Voting Committee, New York Fed Chairman Williams, and further updates on the geopolitical situation.

Israel will send a delegation to negotiate a hostage release agreement with Hamas

Israeli Prime Minister Netanyahu told US President Biden on Thursday that he has decided to send a delegation to resume negotiations with Hamas on the stalled hostage release agreement.

A source in the Israeli negotiation team, who declined to be named, said that after Hamas proposed modifications to the terms of the agreement, the two sides did have a chance to reach an agreement. The source said, "Hamas' proposal includes a very significant breakthrough."

Israel's response to the suggestions made by Hamas through mediators is in stark contrast to the situation during the past nine months of the Gaza War, where Israel has stated that the conditions imposed by Hamas are unacceptable.

An Israeli official stated that the head of the Israeli Mossad Intelligence Agency will lead an Israeli delegation to the talks.

Netanyahu is scheduled to hold consultations with his negotiating team later Thursday, followed by discussions with the security cabinet regarding the release of hostages. The White House stated that Biden and Netanyahu discussed Hamas's response on possible agreement conditions over the phone. The White House stated in a statement, "The President welcomes Prime Minister Netanyahu's decision to authorize negotiators to engage with mediators from the United States, Qatar, and Egypt in an effort to complete the agreement."

Netanyahu's office stated in a statement that Netanyahu reiterated his position over the phone that Israel will only end the Gaza War after achieving all its goals. A source from the Israeli negotiation team said, "This agreement is indeed possible to be implemented." However, the source warned that the agreement may go bankrupt due to "political considerations.".

Some far right partners in Netanyahu's ruling coalition have indicated that they may withdraw from the government if the war ends before Hamas is eliminated. If they withdraw from the coalition government, Netanyahu's term as prime minister is likely to come to an end.

Israel received a response from Hamas on Wednesday to a proposal made public by Biden at the end of May, which includes the release of approximately 120 hostages detained in Gaza and a ceasefire in Palestinian enclaves. A Palestinian official familiar with the mediation work stated that Hamas has expressed flexibility on some terms, which would allow for a framework agreement to be reached if Israel approves.

Two Hamas officials did not immediately respond to requests for comment. Hamas has stated that any agreement must end the war and allow Israel to fully withdraw from Gaza. Israel insists that it will only accept a temporary ceasefire until Hamas is eradicated

It is currently unclear where the Israeli delegation will go to resume negotiations. The previous efforts to end the Gaza conflict were mediated by Egypt and Qatar, and talks were held in these two places.

In Gaza, Palestinians are cautious about the prospect of resuming negotiations.

Non agricultural foresight

The employment sub data of the June ISM manufacturing PMI data for the United States, released on Monday, recorded 49.3, lower than the previous value of 51.1 and the expected value of 50.

On Tuesday, the US Department of Labor's Bureau of Labor Statistics announced that on the last day of May, the number of job vacancies measuring labor demand increased by 221000 compared to the end of April, reaching 8.14 million. The data for the end of April was lowered to 7.919 million job vacancies, instead of the previously reported 8.059 million. Economists interviewed by Reuters previously predicted that there would be 7.91 million job vacancies in May.

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 by Reuters previously predicted that private employment would increase by 160000.

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.

Economists interviewed by Reuters originally estimated that the number of initial jobless claims 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.

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 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.

The data released on Wednesday also showed that the employment sub index of the US June ISM non manufacturing PMI data recorded 46.1, lower than the previous value of 47.1 and the expected value of 49.

"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

Morgan Stanley economist Michael Hanson stated in a report that the bank expects a 200000 increase in non farm employment in June, down from 272000 in May. Additionally, the bank expects the unemployment rate to stabilize at 4%.

At the same time, strategists at Daoming Securities have stated that they expect the employment data to lose momentum, with a 215000 increase in non farm employment in June, a decrease in unemployment rate to 3.9%, and a slowdown in the month on month increase in average hourly wages to 0.2%.

Analysts from Bank of France and Pakistan suggest that the market's response to non farm employment data may be asymmetric. After the core PCE inflation rate slightly increased by 0.1% last month, the smallest increase since November last year, the market's response to the non farm employment data being less than expected may be greater than the response to the data being better than expected. If both inflation and employment weaken, it will trigger a bigger debate on whether the data is rebalancing or starting to deteriorate. Weaker than expected non farm employment data, especially if accompanied by rising unemployment rates, may consolidate the market pricing of the Federal Reserve's two rate cuts in 2024 and force the market to reassess already high terminal interest rates. At the same time, although an unexpected upward trend in data may lead to a sell-off in interest rate expectations, the accompanying steepening of interest rates will be limited, as inflation has made good progress recently and the Federal Reserve will continue to maintain its easing tendency.

Matt Simpson, Senior Analyst at City Index, said, "The weaker than expected ISM services report is a gift that the Fed's dovish faction has been waiting for before the release of non farm payroll data. If the non farm payroll data confirms the economic cracks we have seen elsewhere, gold'>gold prices may rise to $2400." "I speculate that the US dollar index will not retest 106 in the short term, so we expect traders to avoid trading the rebound of the US dollar and buy gold'>gold on dips."

technical analysis

At the daily level, the previous trading day's gold'>gold price recorded a cross star near the Bollinger Bands and the high point of the past month, indicating strong resistance above. The Bollinger Bands are running horizontally, and the gold'>gold price is in a volatile trend. Due to the failure to break through the strong resistance suppression, it is necessary to guard against the risk of gold'>gold price volatility and fall. Preliminary support is based on the 2350 level, and key support is based on the 55 day moving average near 2338.03. If it falls below this level, it will increase the short-term bearish signal, and the gold'>gold price may further fall towards the Bollinger Bands below 2290.78.

Due to the MACD and KDJ crosses, if the gold'>gold price strongly breaks through the resistance near the Bollinger Line track of 2371.37, it is expected to open a new upward channel. In the short term, focus on the resistance at the June 7th high of 2387.59 and 2400 levels, respectively.

Spot Gold Daily Chart