Gold Falls, Strong NFP Erases Year-to-Date Gains
Gold prices fell sharply on Friday (June 5), erasing all year-to-date gains after stronger-than-expected US jobs data boosted the dollar and bond yields. Bullion briefly fell as much as 3.6% to US$4,315.04/oz, signaling deepening selling pressure as the market re-priced a tighter interest rate path in 2026.
The main catalyst came from the US jobs report in May, which beat all estimates, opening the door for the Federal Reserve to consider raising interest rates amid inflationary pressures exacerbated by energy prices. A “rates higher for longer” environment is generally negative for gold because it offers no yield, while a stronger dollar makes the precious metal more expensive for buyers outside the US.
Pressure on gold also intensified after the momentum of its long rally began to fade since its record high of nearly US$5,600 in January. Inflation concerns and the likelihood of Fed tightening diminished gold's appeal, coupled with selling by trend-following traders, which accelerated the decline. The break below the 200-day moving average is seen as increasing the risk of further declines.
The interest rate market has also turned more hawkish. Traders are now fully pricing in a 25 bps rate hike in December, previously expected in March. Comments from Cleveland Fed President Beth Hammack further emphasized this risk, stating that it was reasonable to hold rates for now, but action could soon be necessary if the current trend continues.
Cross-asset pressures exacerbated gold's weakness, including a sell-off in technology stocks that prompted some investors to unwind positions to cover losses elsewhere. At 3:32 p.m. New York time, spot gold fell 3.4% to US$4,321.41/oz, silver plunged 7.8% to US$68.14/oz, while the Bloomberg Dollar Index rose 0.6%. Among industrial metals, copper also fell sharply, amid concerns that tighter financial conditions would depress economic activity and demand for raw materials. (Arl)*
Source: Newsmaker.id
