The price of Gold slumped in the wake of stronger-than-expected US employment growth in June, but the losses were limited, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

Setback for Gold is likely to be short-lived

"A closer look at the labour market report revealed some weaknesses. Much of the employment growth was in the public sector, which could be due to technical factors and could lead to a countermovement in the coming month. However, the slight decline in the unemployment rate is a positive sign."

"This should make the US Federal Reserve optimistic that the uncertainty surrounding US tariff policy has not yet affected companies severely. We therefore continue to assume that the Fed will take its time before cutting interest rates. This is creating headwinds for Gold for the time being."

"However, the main factor supporting the precious metal is not the prospect of interest rate cuts, but above all the damaging US policy, which is eroding investor confidence in safe US assets. Unless the US government makes a U-turn, yesterday's setback for Gold is likely to be short-lived."