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Gold prices surged over 1% following the release of weaker-than-expected U.S. Nonfarm Payrolls (NFP) data, which dampened expectations of aggressive Federal Reserve rate hikes. The XAU/USD pair reached $4,174 after rebounding from intraday lows of $4,121, as traders recalibrated their positioning amid mixed inflation signals. The report showed 14,000 jobs added in May, far below forecasts of 200,000, signaling potential economic slowdowns that could pressure the Fed to pause its tightening cycle.
The shift in Fed policy expectations has weakened the U.S. dollar, creating a tailwind for gold as a traditional safe-haven asset. Traders are now pricing in a 50% probability of a 25-basis-point rate hike in June, down from 80% before the data. This development also impacts other asset classes, with equities and emerging market currencies likely to benefit from reduced hawkish rhetoric.
For Gulf investors, the gold rally highlights the importance of monitoring U.S. labor market trends and central bank policy shifts. The next key events include the June Federal Open Market Committee meeting and the upcoming Consumer Price Index report. Traders should watch for potential support/resistance levels around $4,150 and $4,200 as the market digests this new macroeconomic reality.
