Gold price rebounds on employment shock...Dead cross signals collapse of safe-haven myth

▲ Gold, bear market/AI-generated image

Gold prices have rebounded by 2.5% in the last 48 hours, but 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 recently recorded $4,171.15 per troy ounce amidst high volatility. While it rebounded by about 2.5% in the last 48 hours, it fell by approximately 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 trigger for the short-term rebound was the US June non-farm payrolls 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 about 28% from its all-time high of $5,589 per troy ounce in January. FXLeaders reported that rallies in tech and artificial intelligence (AI) stocks siphoned liquidity from defensive assets, while a strong US dollar and hawkish Fed remarks 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 support at the bottom. Physical buyers in major retail markets like India took advantage of the discount to buy, forming a temporary price floor. However, FXLeaders noted that in cases where a dead cross appeared during a steep downtrend, such as in 2013 and July 2022, it often acted as a signal for a faster and deeper decline rather than a bottom confirmation.

[Article Key Summary]

-Gold rebounded by approximately 2.5% in the last 48 hours but fell by about 14% in the second quarter, recording 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 about 28% from its all-time high of $5,589 per troy ounce in January, and below $4,000, physical buying from India and other regions supported the price bottom.

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