Nonfarm Payrolls Uncertainty Remains High: Is Gold's Rebound an "Illusion" or a "Prelude"?

Huitong Network, June 29—— The rebound in gold prices after falling below $4000 is weak, with the market remaining cautious ahead of Thursday's nonfarm payrolls report. This NFP is affected by temporary employment from the FIFA World Cup, with about 40,000 “noise” jobs potentially distorting the true color of the employment data.

On Monday (June 29) during the European session, spot gold remained volatile, currently trading near $4060/oz.

After slipping below the psychological threshold of $4000, gold prices rebounded slightly but with little strength and lacking confidence, reflecting more of a wait-and-see attitude ahead of key data releases rather than a signal of a trend reversal. This Thursday’s June NFP report (released early due to a US holiday) may reignite the debate within the Federal Reserve about the number of rate hikes, which will in turn determine whether gold finds a stage bottom or continues to fall.

Nonfarm Payrolls: An Unusual Employment Report

The June NFP is far from a routine employment update. Since the new Federal Reserve Chair Kevin Walsh delivered a surprise hawkish signal at the June meeting, the market has largely priced in one more rate hike this year. However, the real suspense lies in whether one hike is enough. Thursday's jobs data will either reinforce this expectation or reignite discussion of a second hike—a scenario which implies drastically different outlooks for the US dollar and gold.

This report has a significant complicating factor: the FIFA World Cup has triggered a wave of temporary employment in hotels, transportation, and event management, which some estimates say may artificially boost the job count by about 40,000. This makes the NFP one of those reports where the headline may not tell the whole story: if strong data is mainly driven by temporary hires, policymakers may not see it as a sign of a true acceleration in labor demand. Investors will focus more on wages, the unemployment rate, and broader labor market indicators to determine if the Fed needs a more aggressive tightening stance.

Data Expectations: Slower Growth with Structural Distortion

The market broadly expects June nonfarm payrolls to rise by 115,000–130,000, down from 172,000, with the unemployment rate holding at 4.3% or ticking up to 4.4%, and average hourly earnings up 0.3% MoM, with YoY growth slowing from 3.5% to 3.4%. Overall, this sketch illustrates a modest cooling of the labor market narrative, in line with the Fed gradually relaxing policy constraints.

However, the data contains an unavoidable "noise": the FIFA World Cup has created a large number of temporary jobs in hospitality, transportation, and event management. Some institutions estimate this may artificially raise employment numbers by about 40,000. Thus, even if job gains reach or slightly exceed expectations, a significant portion may be unsustainable—a classic “one-time boost” rather than a trend improvement.

Therefore, in this NFP release, the market will need to look past the aggregate number and focus on the internal quality: for example, the contribution from leisure and hospitality, structural differences between private and government employment, the "gold content" of wage growth, and the relationship between labor participation and the unemployment rate. Only by stripping out the World Cup’s temporary disturbance can one truly assess the underlying state of the US labor market, and whether this report will consolidate or shake the market’s pricing of Fed hikes for the rest of the year.

Three Scenarios: Three Fates for Gold

Data in line with expectations (most likely)
The market will maintain the pricing of one more rate hike, with September as the most likely window and December as an alternative. This outcome is unlikely to trigger a new USD rally, but also enough to prevent a sharp pullback. For gold, this most likely means short-term stabilization rather than a true rebound—especially with June CPI data still pending in two weeks.

Data significantly beats expectations, especially with wage gains in tandem (most bearish for gold)
This would strengthen the rationale for a September hike and reignite speculation for a December hike, reinforcing the USD’s mid-term uptrend. Gold’s support at $4000 would face a stern test, possibly opening a new leg lower.

Data misses expectations unexpectedly (less likely)
Given the World Cup’s temporary boost, a miss is relatively unlikely. However, even if it happens, one month of weak data is unlikely to fundamentally shift the Fed’s tightening bias built on months of resilient hiring. It’s more likely the market just delays the expected hike from September to December, rather than eliminating the tightening bias entirely. In this case, gold may establish a short-term bottom in the $4000-4400 range, but a new bull run is unlikely.

Technical Analysis

According to the daily chart, spot gold is overall in a medium-term downtrend, with prices rolling back from a 5419.01 high and recently rebounding slightly after probing a 3959.04 low. The short-term MA20 (4227.20), mid-term MA50 (4453.28), and long-term MA100/MA200 are all above price, layering resistance, with the primary rebound resistance at the 20-day moving average, and the mid- to long-term averages capping a reversal in the downtrend.


In terms of indicators, MACD remains in negative territory, DIFF (-118.89) stays below DEA (-109.97), and the green histogram continues, with bearish momentum slightly narrowed but no clear bullish crossover; RSI at 36.11 sits below the 50 midline in a weak region—while not oversold, buying pressure is thin, and there are no stabilization or strengthening signs for bulls.


(Spot gold daily chart, source: Easy Huitong)

UTC+8 June 29, 16:02, spot gold quoted at $4063.11/oz.