Small non-agricultural gold prices rose by $10. Will big non-agricultural gold hit a new high tonight?

On August 1, Beijing time, the US Department of Labor released data showing that the number of initial jobless claims increased by 14,000 in the week ended July 27, reaching 249,000, setting a new high in nearly a year. The data far exceeded market expectations and triggered market concerns about a slowdown in the US labor market.

After the data was released, the US Treasury market responded quickly, with the 10-year Treasury yield falling 2.02% in the day to 4.022%. At the same time, the spot gold price rallied short-term, breaking through the $2,450/ounce mark, gaining 0.12% in the day. The dollar index DXY fell more than 10 points in the short-term, and is now at 104.26.

(One-hour chart of gold prices)

foreign exchange trading platformAnalysts noted that geopolitical tensions and a slowing global economy could support the dollar, making it a traditional "safe haven" for investors in tense times, despite the Fed's looming rate cut. In addition, traders expect the Fed to cut rates by 72 basis points this year, an expectation that was reinforced after the Fed meeting.

Peter Fung, head of trading at Yongfeng Precious Metals, said the trend for gold remained bullish, with prices expected to hit $2,500 this year as the Federal Reserve cuts interest rates. Zero-yielding gold tends to perform well in a low interest rate environment.

Non-farm unit labour costs in the US came in at just 0.90 per cent in the second quarter, well below expectations of 1.80 per cent, while non-farm productivity came in at 2.30 per cent, beating expectations of 1.70 per cent. This suggests slower labour cost growth, and higher non-farm productivity could have a positive impact on the labour market.

The stronger-than-expected increase in U.S. labor productivity in the second quarter helped moderate the increase in labor costs and provided further evidence that inflationary pressures are weakening. The preliminary U.S. non-farm productivity value recorded 2.3% in the second quarter, compared with only a slight increase in Quarter 1 this year. The preliminary non-farm unit labor cost value recorded 0.9% in the second quarter, and Quarter 1 increased by 3.8%. Productivity data tend to fluctuate widely on a quarterly basis, but the overall improvement over the past year indicates that businesses are stepping up their efforts to mitigate the impact of higher operating costs. Despite high borrowing costs, business investment has remained strong, supporting long-term economic growth. The report provides further evidence for the Federal Reserve that the risk of another acceleration in inflation is diminishing.

From a technical perspective, the short-term rise in spot gold prices contrasts sharply with the decline in the dollar index. Support and resistance levels for spot gold are around $2,440 and $2,500, respectively, while support and resistance levels for the dollar index are around 104 and 105, respectively.

Geopolitical factors are also weighing on market sentiment. News of the assassination of Ismail Haniyeh, the Hamas leader, in Tehran, the Iranian capital, triggered threats of retaliation against Israel and heightened fears that the conflict in the Middle East could turn into a wider war. The uncertainty has supported safe-haven assets such as gold.

Market focus turns to the upcoming U.S. jobs report for July. Employers are expected to add fewer jobs in July than in June, which could have a further impact on the market. Matt Simpson, senior analyst at City Index, cautioned that gold may need to be cautious above $2,500, as it is not easy for gold to maintain gains at these levels.