Gold prices plunged sharply during Friday’s North American trading session following a blowout US Nonfarm Payrolls report that significantly exceeded market expectations. The employment data, which also included upward revisions for the previous three months, triggered a sharp rally in the US Dollar Index above the key 100 level and sent precious metals tumbling. The stronger-than-anticipated jobs figures have dramatically shifted Federal Reserve policy expectations, raising the probability of another interest rate hike as the labor market demonstrates continued resilience.
The immediate market reaction saw gold traders rapidly unwinding long positions as higher rates reduce the appeal of non-yielding assets like bullion. The DXY surge above 100 marks a critical technical and psychological threshold, pressuring all dollar-denominated commodities. Forex brokers and commodity desks are likely experiencing heightened volatility as positioning adjusts to this hawkish employment picture.
FXnCO Insight
Traders should monitor Fed speaker commentary over the coming sessions as any hawkish confirmation could extend gold’s decline and push DXY toward further multi-month highs.
Source: FXStreet