Precious metals extended their recovery for the third consecutive trading session, with both and opening higher during Friday’s Asian session. After falling to multi week lows earlier this week, bullion staged an impressive rebound as weaker-than-expected US employment data eased concerns over additional monetary tightening by the Federal Reserve.
Earlier in the week, both metals remained under heavy selling pressure as traders reacted to expectations of higher US interest rates and a stronger US dollar.
However, market sentiment shifted sharply from Wednesday onward as traders began covering short positions, triggering a strong technical rebound in both gold and silver.
Weak US Employment Data Supports Bullion
The major catalyst behind the recent recovery was the June US Nonfarm Payrolls report, which showed that the US economy added only 57000 jobs, well below market expectations of approximately 113000 and marking the weakest monthly job growth in four months. The softer employment report reduced expectations that the Federal Reserve would aggressively tighten monetary policy later this year. Since employment and inflation remain the Fed’s primary policy indicators, weaker labor market data has encouraged investors to believe that future rate hikes could become less likely. Lower interest rate expectations generally support precious metals because they reduce the opportunity cost of holding non-yielding assets such as gold and silver.
US Dollar Weakness Adds Further Support
Another important factor behind the recovery has been the sharp decline in the US Dollar Index. The US Dollar Index () fell from around $101.365 on Wednesday to approximately $100.320 within two trading sessions.
Since gold and silver typically move inversely to the US dollar, the weaker dollar provided additional support for precious metals by making them more attractive to investors holding other currencies. At the same time, the continued to decline over the past three sessions, falling toward $66.900. A declining ratio generally indicates that silver is outperforming gold, reflecting improving investor appetite for industrial and higher-beta precious metals during short-term recoveries.
Market Performance
During the Asian session:
traded near $4207.90 per ounce
traded around $63.135 per ounce
Trading activity remained volatile, although overall participation was lighter ahead of the US Independence Day holiday, when American financial markets were closed.
Technical Outlook
While the recent rebound has been impressive, I believe the rally has largely been driven by short covering and profit booking after this week’s sharp correction. With both gold and silver recovering strongly over the past three sessions, prices are approaching important short-term resistance zones where fresh selling pressure could emerge. Although the weaker US dollar has supported bullion, traders should remember that precious metals remain highly sensitive to incoming economic data, Federal Reserve expectations, Treasury yields, and currency movements. After such a sharp rebound, the possibility of another round of profit booking has increased.
From a technical perspective, I expect selling pressure to reappear at higher levels, particularly if traders begin locking in gains before next week’s trading session. There is also a possibility of a lower opening (gap down) early next week if profit booking accelerates.
Trading Strategy – Gold and Silver Futures
Gold August Futures
Sell Zone: $4207 – $4217 per ounce
Targets:
$4160
$4150
$4130
Stop Loss: As per your risk management.
Silver September Futures
Sell Zone: $63.100 – $63.300 range
Targets:
$62.00
$61.00
$60.00
Stop Loss: As per your risk management.
Conclusion
1. Gold and silver have recovered sharply over the past three trading sessions, supported by weaker-than-expected US payroll data, a softer US dollar, and broad short covering activity. However, after such a strong rebound, prices are approaching key resistance levels where profit booking could emerge.
2. In my view, traders holding long positions may consider protecting gains if prices begin to lose momentum near resistance.
3. For short-term traders, rallies toward higher levels could present opportunities if technical weakness develops. Given the current volatility, disciplined risk management and close monitoring of the US dollar, Treasury yields, and upcoming economic data remain essential.
Disclaimer
1. This analysis reflects a market opinion for educational purposes only and is not investment advice.
2. Commodity futures trading involves substantial risk.
3. Always use appropriate position sizing, stop loss orders, and your own judgment before entering any trade.
