Gold melts down as blowout NFP sends DXY above 100
Gold (XAU/USD) price collapses during the North American session on Friday as the latest Nonfarm Payrolls report in the US smashed forecasts, with figures for the last three months upwardly revised, increasing the chance of a Federal Reserve (Fed) rate hike. The XAU/USD pair trades at $4,336, down more than 3%.
XAU sinks as NFP shock sends US Dollar soaring
Nonfarm Payrolls in May significantly exceeded expectations, increasing by 172K—more than double the forecasted 85K—highlighting the robustness of the labor market and supporting the view that the Federal Reserve should focus on fighting inflation. Additionally, the Unemployment Rate remained steady at 4.3%, providing strong grounds for Fed officials to consider raising interest rates.
The Greenback appreciated sharply as traders expected higher US interest rates. The US Dollar Index (DXY), which measures the American Dollar's performance against six currencies, has risen 0.59% to 100.01 after bouncing from daily lows around 99.16.
US yields skyrocket as traders eye a Fed rate hike by 2026
US Treasury yields are soaring, with the 10-year Treasury note, which moves inversely with Gold prices, up nearly six basis points to 4.53%, a headwind for the yellow metal.
Beth Hammack from the Cleveland Fed was very hawkish, stating that it is “reasonable to keep rates steady for now, but if recent trades persist, it might soon be necessary to act against high inflation.”
According to Prime Terminal data, money markets assigne a 67% probability to a Federal Reserve rate increase at the December meeting. Meanwhile, traders anticipate the US central bank will hold rates steady in June.
US-Iran talks in trouble as Hezbollah rejects deal
In the Middle East, the narrative hasn’t changed, with an update that Iran is backing Lebanese allied Hezbollah in rejecting the ceasefire proposed by the US, and troubling negotiations between Washington and Tehran. Iran stated that an end to hostilities in Lebanon is required before setting out for a peace agreement with the United States.
The US-Iran war “will end only when it ends in Lebanon as well,” said Iranian Foreign Minister Abbas Araghchi. He added that the Lebanon conflict would end with the “withdrawal of Israeli forces from the territories they have occupied.”
Next week’s US economic schedule
The US docket will feature inflation data on the consumer and producer sides, as well as jobless claims.
Gold Technical Levels
Gold price cleared the 200-day Simple Moving Average (SMA) of $4,432, an indication that the yellow metal shifted bearish from a technical standpoint.
The Relative Strength Index (RSI) shows that momentum remains bearish, but the index is accelerating towards oversold territory, a signal that sellers are gaining traction. Hence, the path of least resistance is downwards.
If XAU/USD clears the $4,300 level, the next support would be the upslope trendline from the October 2025 lows, near the $4,200-$4,230 area. Once those levels are surpassed, the next target is the March 23 cycle low at $4,098.
For a bullish recovery, Gold buyers must reclaim the 200-day SMA and the $4,450 psychological figure. Still above this area, they will meet stiff resistance at $4,500, ahead of the 50-day SMA at $4,627.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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