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Movements Last Week (Week of July 28): Surprise in July Employment Statistics

The USD weakened, leading to a recovery of NY gold prices to the $3,400 range. Although the yen's appreciation capped the upside, domestic prices remained stable around 16,000 yen.

Last week (the week of July 28), the New York gold futures price (NY gold) rebounded on a weekly basis. The US employment statistics for July, announced on August 1, showed weak employment levels, and past data was significantly revised downward, surprising the market. Since July, the US Dollar, which had been rising against a backdrop of better-than-expected corporate earnings and a strong US economy, fell sharply, and US stocks also declined significantly. As a result, some funds flowed into US Treasuries, causing prices to rise, and the benchmark 10-year bond yield plummeted to its lowest level in five weeks. In this situation, NY gold surged.

On July 31, the day before, U.S. President Trump signed an executive order imposing reciprocal tariffs of 10% to 41% on imports from 69 trading partner countries and regions, which rekindled concerns about global trade and led to an influx of funds into gold, considered a safe asset.

On August 1, NY gold closed at $3,399.80, up $51.20 from the previous day. Buying continued thereafter, with after-hours trading mostly hovering near the highs, ending the weekend trade at $3,416.00. The weekly chart for NY gold showed a rebound of $64.20 (1.9%) compared to the previous weekend. The range was $3,300 to $3,416.90, with a price fluctuation of $116.90, which was somewhat larger. In the last column, the assumed lower limit of the range was set at $3,300, and it was estimated that even if it fell below that, it would be around $3,280.

Progress in tariff negotiations, selling pressure due to a cautious FOMC on rate cuts

Last week (the week of July 28), it was agreed during the US-EU trade negotiations that a 15% tariff would be imposed on the EU, which eased concerns over escalating trade frictions, leading to a dominance of selling in NY gold. On the other hand, the US-China ministerial talks held in Stockholm, Sweden, reported that the deadline for implementing tariffs would be extended by 90 days, which also served as a selling cue, with NY gold trading around $3,300.

On July 30, a statement was released by the FOMC (Federal Open Market Committee), which indicated that there would be no change to the expected policy interest rates. During the press conference held by Chair Powell of the FRB (Federal Reserve Board), a cautious hawkish stance regarding interest rate cuts was demonstrated. While the U.S. labor market continues to remain robust, the stance of closely monitoring the impact of tariffs on inflation was reaffirmed. However, it became a topic of discussion that two board members voted against the decision to keep rates unchanged. Nonetheless, since both had previously expressed support for rate cuts at the July meeting, the impact on the markets was limited.

The market has already factored in the Federal Reserve's cautious stance, and before the employment statistics announcement on August 1, the bond futures market anticipated a 38% probability of a 0.25% rate cut at the September FOMC.

Surprise resignation of Director Kugler

On August 1st, during the late afternoon, the NY gold price rose due to the announcement by the Federal Reserve regarding the resignation of Governor Coogler effective August 8th. Governor Coogler had been absent from the FOMC meetings on July 29 and 30. His term was set to last until the end of January 2026. With his resignation, President Trump will be able to appoint a successor sooner. This has led to an acceleration in selling the Dollar, as it is viewed that the appointed successor will align with President Trump's preference for aggressive interest rate cuts. The yield on 10-year bonds further declined, which in turn boosted NY gold.

July US employment statistics, surprise with major revisions to past data

The U.S. employment report showed that the growth in non-farm payrolls (NFP) averaged an increase of 35,000 jobs per month over the past three months, a significant decrease from the 123,000 jobs added in the same period last year. The NFP for July increased by 73,000 compared to the previous month, falling short of market expectations of an increase of 110,000.

The key point is that 258,000 people were revised downward over the two months of May and June. As a result, the monthly average was significantly revised down to 35,000, forcing a reassessment of the previously optimistic market scenario. The unemployment rate rose from 4.1% to 4.2%. Approximately 38,000 workers gave up looking for jobs or left the workforce (withdrawal from the labor market), and the labor participation rate declined for three consecutive months from 62.3% in June to 62.2%, reaching a three-year low. Without this, the unemployment rate would have been estimated to reach 4.3%.

Domestic gold prices are capped by the strong yen.

In line with the movement of NY gold, domestic gold prices also rebounded on a weekly basis. However, the rapid decline of the USD/JPY exchange rate following the U.S. employment statistics (a sharp rise in the yen) became a factor that capped the upside. The closing price of gold futures (JPX gold) at the Osaka Exchange on August 1 was 16,081 yen, recovering from the previous day's range of 15,900 yen. The weekly price was a rebound of 76 yen (0.47%) compared to the previous weekend. The range was 15,892 to 16,138 yen, with a price fluctuation of 246 yen.

On August 1, the USD/JPY exchange rate briefly reached 150.92 yen, the highest level since March 28 (a weaker yen), before the employment statistics were announced. However, following the employment data results, it dropped by more than 2%, falling to a low of 147.30 yen and closing at 147.41 yen. This marked a significant decline since April 10.

Movement this week (week of August 4): NY gold firmed up on US employment data. Attention on President Trump's comments regarding Fed personnel. NY gold is expected to be between $3,380 and $3,450, while JPX gold is estimated to be between ¥15,900 and ¥16,300.

The U.S. employment report revealed that employment had sharply decelerated in May. In response to this turbulence, the entire market will be forced to reconsider investment policies. Within this context, regarding the gold market, stagflation, characterized by simultaneous economic slowdown and inflation, is likely to be a focus, suggesting that the lower prices may remain stable.

The only notable economic indicator is the ISM Non-Manufacturing Index.

The notable U.S. economic indicator for this week (the week of August 4) is limited to the ISM Non-Manufacturing Index for July, which will be released on August 5. However, in light of the downward revision in employment statistics, the market's reaction to the results is likely to be limited. The manufacturing index announced on August 1 showed a notable decline in the employment index.

The focus is on the Fed personnel and President Trump's remarks.

Amidst this, what stands out are the remarks made by President Trump regarding Chairman Powell of the Federal Reserve and personnel matters at the Fed. Concerning Chairman Powell, the President himself has stated that any move to dismiss him would lead to market turmoil, indicating that such discussions are sealed. This is likely a result of accepting the advice of Treasury Secretary Mnuchin.

Another surprise last week, aside from the employment statistics, was the resignation of Governor Coogler. While attention was focused on the successor appointment, President Trump made it clear on August 3 that he intends to nominate a new governor within the next few days. It has been reported that he stated, "We are considering multiple candidates," and since there is a possibility that one of them could succeed Chairman Powell, whose term expires in May 2026, this appointment will likely be a point of interest for the market.

Regarding Chairman Powell, there is information that he will be absent from the Jackson Hole meeting scheduled for August 21-23, and future developments are being watched closely. This employment data may have influenced Chairman Powell's future, and the upcoming developments are uncertain.

In this context, this week's NY gold is expected to be between 3,380 and 3,450 Dollar, while for JPX gold, it is anticipated to be between 15,900 and 16,300 yen, including a close to the highest price.