Gold Price Forecast: XAU/USD weakens after upbeat NFP
- US Nonfarm Payrolls rose by 339K in May, exceeding expectations of 190K.
- The Unemployment Rate increased more than expected from 3.4% to 3.7%.
- US Dollar gained momentum, US yields moved higher, and Gold printed fresh daily lows.
Gold prices dropped from the $1,980 area to $1,971 following the release of the US official employment report, which showed an increase in Nonfarm Payrolls above expectations.
The US economy created 339K jobs in May, exceeding the market consensus of 190K, marking the highest reading in four months. Additionally, April’s figures were revised higher from 253K to 294K. The unemployment rate rose from 3.4% to 3.7%, with the Labor Force Participation holding steady at 62.6%.
The US Dollar initially rose across the board, hitting fresh highs versus the EUR, GBP, and JPY, and trimmed losses against the CAD, NZD, and AUD. However, the Dollar's momentum started to fade.
US yields spiked but then pulled back as markets analyze whether the job numbers were strong enough to pressure the Federal Reserve for another rate hike. The increase in Treasury yields weighed on Gold, causing it to tumble to $1,971. Currently, the yellow metal trades at $1,975 in a volatile environment post-NFP.
On the upside, Gold faces strong resistance around the $1,980/85 area. A break higher could drive prices towards $2,000. Conversely, a slide under $1,970 would weaken the outlook, with the next support standing at $1,960.
Technical levels