Gold prices experienced a decline followed by a recovery last week. After the non-farm payrolls data came in surprisingly weak, expectations for interest rate hikes cooled, leading to a short-term stabilization and rebound in gold prices. The spot price of gold in London rose by over 2% for the week, while the main contract for gold on the Shanghai Futures Exchange saw a modest increase.

Market attention this week will be on the release of the Federal Reserve's meeting minutes on Thursday, which could lead to increased volatility in gold prices around that time.

From a macroeconomic perspective, the US ISM Manufacturing PMI registered at 53.3%, marking its sixth consecutive month of expansion, though it was slightly below the previous reading of 54 and below the expected 53.9%. The production index fell to 52.2, a near six-month low, while the employment index rose to 49.7 but remained below the critical 50-point threshold. On the same day, the ADP "small non-farm payrolls" report showed an addition of 98,000 jobs, missing the expectation of 119,000. Furthermore, the US Bureau of Labor Statistics released the June non-farm payrolls report, which showed a mere addition of 57,000 jobs—far below the market expectation of 113,000 and the lowest in nearly four months. Data for April was revised down from 179,000 to 148,000, and May's figure was revised down from 172,000 to 129,000, resulting in a combined downward revision of 74,000 jobs over the two months. The unemployment rate fell from 4.3% to 4.2%, hitting a new low since June of last year, but the labor force participation rate dropped by 0.3 percentage points to 61.5%. The decline in the unemployment rate was primarily due to an increase in individuals exiting the labor force. Influenced by the poor employment data, the Federal Reserve moved to cool expectations for imminent rate hikes. At the European Central Bank's annual conference, Federal Reserve Chair Warsh explicitly announced that the Fed would abandon forward guidance on interest rates, with future decisions relying entirely on real-time economic data. However, he noted that inflation risks in the US had decreased over the past four weeks, with inflation expectations trending downward. He also reaffirmed the commitment to continuing the reduction of the balance sheet.

On the geopolitical front, indirect technical talks between the US and Iran were held in Doha, Qatar, focusing on the implementation of a memorandum of understanding. The discussions covered issues such as the return of Iran's frozen funds and security assurances for the Strait of Hormuz. The Strait of Hormuz is currently under a "limited navigation" status, but traffic volume continues to show a slight recovery.

The pricing logic in the precious metals market is beginning to shift from the "Federal Reserve hawkish tightening narrative" to a phase of "data verification and policy adjustment." In other words, following the disappointing non-farm payrolls data and Warsh's efforts to cool inflation expectations, market expectations for Federal Reserve rate hikes have started to rapidly diminish. Consequently, the US dollar index retreated after an initial surge, while the precious metals market stabilized after its decline. However, it is important to note two key points: first, the Federal Reserve has not signaled the start of rate cut expectations; second, Warsh simultaneously emphasized the continuation of balance sheet reduction. The liquidity tightening effect of balance sheet reduction is more persistent. Even if short-term inflation retreats and provides a rebound, the interest rate pressure formed by the balance sheet reduction will still limit the upside potential for gold prices. Therefore, while gold may experience a periodic rebound, the extent of this rise should not be overly optimistic.