Gold Price Rebounds on Employment Shock...Dead Cross Signals Collapse of Safe-Haven Myth

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Although gold prices have rebounded by 2.5% in the last 48 hours, the emergence of a dead cross combined with a 14% plunge in Q2 has brought cracks in the safe-haven rally to the forefront of the market.

According to financial media outlet FXLeaders on July 3 (local time), gold recorded $4,171.15 per troy ounce amid recent high volatility. While it rebounded by approximately 2.5% in the last 48 hours, it fell by about 14% in the second quarter, marking its worst quarterly performance since 2013.

Technical burdens have also increased. On June 29, a dead cross was confirmed, with the 50-day simple moving average clearly falling below the 200-day simple moving average. FXLeaders diagnosed that despite the current rebound, algorithmic and chart-based trading flows are still heavily skewed downwards.

The direct catalyst for the short-term rebound was the US June non-farm payroll report. The US economy added only 57,000 jobs in June, significantly missing market expectations of 114,000. This indicator eased concerns about aggressive interest rate hikes by the Federal Reserve (Fed), providing a breather for gold prices, which do not pay interest.

However, before the rebound, gold had fallen by approximately 28% from its all-time high of $5,589 per troy ounce in January. FXLeaders reported that rallies in technology and artificial intelligence (AI) stocks drew liquidity away from defensive assets, while a strong US dollar and hawkish Fed statements kept real interest rates high, fueling a massive sell-off.

After falling below the psychological support level of $4,000 per troy ounce, physical demand provided a floor. Physical buyers in major retail markets like India took advantage of discounted prices to buy, forming a temporary price bottom. However, FXLeaders noted that in cases where a dead cross appeared during a steep downtrend, as in 2013 and July 2022, it functioned as a signal for a faster and deeper decline rather than a confirmation of a bottom.

[Article Key Summary]

-Gold rebounded by approximately 2.5% in the last 48 hours, but fell by about 14% in the second quarter, marking its worst quarterly performance since 2013.

-On June 29, a dead cross was confirmed, with the 50-day simple moving average falling below the 200-day simple moving average.

-Gold fell by approximately 28% from its all-time high of $5,589 per troy ounce in January, and below $4,000, physical buying from places like India supported the price floor.

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