Gold price falls on NFP data, spiking T-yields

Gold price has dropped despite the week’s strong performance in an expected reaction to US job growth that exceeded expectations for May 2023.

Rising US Treasury bond yields as well as the robust USD do exert downward pressure on the precious metal. US debt-ceiling resolution contributed to easing bond yields, a further potential factor impacting gold price.

Gold price retreated after hitting a daily high of $1977.87, as the release of a solid US jobs data report underpinned US Treasury bond yields, a headwind for the precious metal. That, alongside a strong US Dollar, keeps the Gold Index downwardly pressured but still set to end the week with decent gains. At the time of writing, the XAU/USD is trading at $1947.50 per ounce.

XAU/USD falters amidst robust US data, Treasury yields surge and heightened Fed rate hike expectations. A risk on impulse keeps safe-haven assets under pressure, as Wall Street shrugged off a solid employment report from the United States (US). On Friday, the US Department of Labor revealed May’s Nonfarm Payrolls report, which crushed estimates of 190K, as the economy created 339K jobs. Regardings to the Unemployment Rate grew by 3.7% YoY from 3.4%.

US Treasury bond yields reacted to the upside, with 2s jumping 16 bps to 4.501%, while 10s stand at 3.689%, gaining nine bps. The greenback edged up 0.43% as shown by the US Dollar Index at 104.026, ready to post its first weekly loss, snapping three weeks of gains.

Bets that the US Federal Reserve will keep rates unchanged at the June meeting increased, although, in July, it is almost sure that the US central bank will raise rates by 25 bps.

Once the US House and Senate approved the US debt-ceiling bill, US bond yields dropped. The bill would be signed by US President Joe Biden during the weekend, ending the debt fight with long awaited settlement and deal.