A weak June jobs report handed gold a fresh macro catalyst just as the technology trade showed its first real cracks in months. The Gold-to-tech ratio may hold the answer to whether the metal’s three-month slide is ending.
Gold spent the past three months being crushed by the US technology sector, but a soft June payrolls print has given it a reason to fight back. The Gold-to-XLK ratio has fallen by more than 32%, including a stretch of almost ten consecutive weekly declines, dropping it back to the same broad area that marked major relative lows in 2021 and 2024.
Weak jobs data hands gold a catalyst
June nonfarm payrolls rose by only 57,000 against expectations of roughly 110,000, a miss of around 48%. April and May were also revised lower by a combined 74,000 jobs, and although unemployment fell to 4.2%, labour-force participation declined too, making the headline improvement less convincing.
The print makes it harder for the Federal Reserve to turn more hawkish without another strong inflation or employment report. Following the release, the probability of a July rate hike fell below 20%, the dollar weakened by roughly 0.5% and spot gold gained more than 2%. Lower rate-hike expectations can reduce Treasury yields and the opportunity cost of holding an asset that pays no interest.
Why the tech ratio matters
XLK tracks the S&P 500 technology sector, but it is currently heavily influenced by AI hardware. Semiconductors and semiconductor equipment account for almost half of the fund, with major holdings including Nvidia, Apple, Microsoft, Micron, Broadcom and AMD. That leaves the ratio heavily exposed to the semiconductor cycle that drove much of the Nasdaq’s gains over the past year.
That part of the market is now under pressure. Reports that Meta was developing a cloud business to sell excess AI computing capacity helped trigger the latest reassessment, raising questions over whether too much capacity has been built too quickly.
The clearest signal is against chips
Gold’s relative recovery appears across the Nasdaq-100, the Magnificent Seven and the S&P 500, but the strongest signal is Gold/SOX. On that ratio, daily RSI has recovered above 50 while weekly RSI sits near 29, suggesting gold is outperforming semiconductors more convincingly than it is beating the wider equity market. If that strength broadens into XLK and the Nasdaq, it would reinforce the possibility that gold is forming a more important low.
Source: Investing.com
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