- XAU/USD declines after upbeat NFP report dampens Fed rate cut expectations, yet retains a weekly gain of over 1.30%.
- U.S. economy adds 139K jobs in May, with the Unemployment Rate steady at 4.2%, lifting the US Dollar and Treasury yields.
- Market scales back Fed rate cut bets as focus shifts to the June 17–18 FOMC meeting.
Gold prices fell for the second straight session on Friday, but the precious metal remains on track to end the week with a gain of over 1.30%, despite pressure from a stronger-than-expected U.S. Nonfarm Payrolls (NFP) report. As of writing, XAU/USD is trading at $3,316, down 0.84% on the day.
The U.S. Bureau of Labor Statistics (BLS) reported that the labor market held firm in May, with the Unemployment Rate unchanged from April. Meanwhile, U.S. equity markets partially recovered from Thursday’s losses amid political tensions, as President Trump’s dispute with Tesla CEO Elon Musk intensified following the House's approval of the debt ceiling increase.
Gold prices declined as the U.S. Dollar rebounded, with the DXY climbing 0.49%, fueled by rising Treasury yields and revised expectations for the Federal Reserve’s rate path. The strong jobs data led investors to scale back bets on imminent Fed rate cuts.
Despite the short-term pullback, geopolitical tensions—particularly the ongoing Russia-Ukraine war and the conflict between Israel and Hamas—continue to offer potential upside risk for bullion.
Looking ahead, the U.S. economic calendar will be closely watched, especially with the Fed entering its blackout period ahead of the June 17–18 FOMC meeting. Key data points next week include CPI, PPI, and the University of Michigan Consumer Sentiment Index.
Daily Digest Market Movers: Gold Drops as Soaring Yields Lift the US Dollar
- Gold prices retreated as US Treasury yields surged, boosting the US Dollar and weighing on precious metals. The benchmark 10-year Treasury yield jumped more than 9.5 basis points to 4.484%, while real yields climbed in tandem, reaching 2.196%. These gains in yields have created headwinds for gold, which pays no interest and tends to fall out of favor during periods of rising rates.
- The latest US Nonfarm Payrolls (NFP) report for May showed stronger-than-expected job creation, with 139K new jobs added—above forecasts of 130K, though down from April’s revised 147K. While the data suggests the labor market is gradually cooling, it remains resilient amid broader economic deceleration.
- The unemployment rate remained steady at 4.2%, and the solid job figures prompted a repricing of interest rate expectations. Traders now anticipate fewer than two rate cuts by the Federal Reserve before the end of 2025.
- Adding to the broader market narrative, Metals Focus reported that global central banks are projected to purchase 1,000 metric tonnes of gold in 2025, marking the fourth consecutive year of robust accumulation as institutions diversify away from US dollar-denominated assets.
- Meanwhile, easing tensions in the US-China trade relationship could place downward pressure on gold prices, although the metal remains up more than 26% year-to-date. According to data from Prime Market Terminal, money markets are currently pricing in around 44.5 basis points of rate cuts by year-end.
Source: Prime Market Terminal
XAU/USD Technical Outlook: Gold Remains Bullish Despite Dip Below $3,360
Gold (XAU/USD) slipped to a four-day low of $3,316 during Friday’s session but continues to consolidate above the critical $3,300 support level. A sustained break below this threshold could expose the market to further downside, with the next target seen at $3,250.
The Relative Strength Index (RSI) has turned bearish, suggesting the potential for additional short-term weakness. However, the broader uptrend remains intact, keeping the bullish outlook alive.
If XAU/USD holds above $3,300, bulls could look to reclaim the weekly high of $3,403, with further resistance at $3,450. A break above this zone would open the door for a test of the all-time high near $3,500.
Conversely, if $3,300 fails to hold, gold may slide toward the 50-day Simple Moving Average (SMA) at $3,235. Below that, the April 3 high, now serving as support, lies at $3,167.
