Harmovest Capital | Daily Report: Dollar Up, Gold Still Buy?

07/04/2026 Market Briefs

• U.S. ISM Services PMI remains resilient

• Market risk-off sentiment is gradually easing

• The U.S. Dollar Index continues its upward trend

Market Overview

U.S. ISM Services PMI Remains Resilient

• Another solid ISM activity reading is consistent with the U.S. economy growing at an annual rate of 2.5% in 2026.

• However, concerns arise as employment declined sharply in March while wages increased, suggesting businesses are becoming more cautious amid heightened geopolitical tensions in the Middle East.

• Although the ISM Services PMI came in slightly below expectations, it remains at a healthy level, indicating that the U.S. economy is still relatively well-positioned to withstand external pressures.

• The headline index fell from 56.1 to 54 (vs. 54.9 expected), aligning with the outlook for 2.5% economic growth this year.

• In detail, new orders improved from 58.6 to 60.6. However, business activity dropped from 59.9 to 53.9, and the employment component fell sharply from 51.8 to 45.2, well below the 50 breakeven level.

• While Fridays nonfarm payrolls (+178,000) exceeded expectations, gains in the services sector were partly driven by returning healthcare workers and a rebound from weather-related weakness in February.

• Overall, job growth remains disappointing, averaging only 20,000 per month since early 2025. This raises concerns that if the economy cannot generate sufficient jobs during expansion periods, rising uncertainties could increase the risk of higher unemployment in the coming months.

• The sharp decline in ISM employment does little to ease these concerns.

• The Federal Reserve faces a dilemma as inflation remains elevated. The prices paid index surged from 63.0 to 70.7, indicating persistent inflationary pressure, suggesting the Fed may continue to adopt a wait-and-see approach.

• Upcoming CPI data may show headline inflation rising from 2.4% to 3.4%, driven by higher gasoline prices.

Impacted Markets

• U.S. Dollar

• Gold

• S&P 500

Summary

Despite rising inflation pressures driven by geopolitical tensions, U.S. economic data continues to show resilience. This has led to a gradual easing of risk-off sentiment and increased demand for risk assets such as equities and cryptocurrencies.

Today's Key Events

• Eurozone Services PMI

• UK Services PMI

• U.S. Core Durable Goods Orders

The market will focus on U.S. durable goods orders, with expectations for a stronger-than-forecast reading supported by the resilience of the U.S. economy.

Impacted Markets

• U.S. Dollar

• Precious metals (Gold, Silver, Platinum)

• U.S. equity indices

Trading Strategy

• Long precious metals

Market Sentiment Analysis

Fear & Greed Index

The Fear & Greed Index, a key gauge of market sentiment, currently stands at 23 (Fear), up from 19, indicating that risk aversion remains elevated.

Rising geopolitical tensions, particularly involving Iran, have driven energy prices higher and increased concerns over persistent inflation. This may push central banks to maintain higher interest rates, further supporting risk-off sentiment.

In addition, tariff pressures on the U.S. economy have increased demand for safe-haven assets such as gold and silver.

Given the elevated risk sentiment, a long position in gold, silver, and U.S. Treasuries is recommended.

Technical Analysis

XAUUSD (Gold)

Price has tested the resistance zone around EMA89 and EMA144 at 4788 and has started to move lower.

Despite the short-term pullback, elevated risk sentiment continues to support precious metals. Gold is expected to trade in a range-bound to slightly bearish trend, with key levels between 4650 and 4727.