Gold prices plunged Friday following a blockbuster US jobs report that triggered a broad-based rally in the US Dollar and Treasury yields. The precious metal had briefly climbed above $4,500 on Thursday, posting nearly 2% gains during a two-day recovery, but quickly surrendered most of those advances as Nonfarm Payrolls data surprised significantly to the upside.
The stronger-than-expected employment figures reinforced expectations that the Federal Reserve may maintain higher interest rates for longer, reducing gold’s appeal as a non-yielding asset. The Dollar’s strength following the NFP release made gold more expensive for holders of other currencies, while rising Treasury yields offered competing returns that precious metals cannot match.
Traders and investors holding gold positions face immediate pressure as the robust labor market data shifts sentiment away from safe-haven assets. The reversal comes at a critical technical juncture after gold’s brief push above $4,500, potentially signaling weakening momentum in the recent rally.
FXnCO Insight
Gold bulls should watch for a sustained break below Thursday’s lows as confirmation that the recent recovery has failed, potentially opening downside targets toward $4,400.
Source: FXStreet