Gold falls to three‑month low after strong US jobs data

Gold prices plunged to a three-month low last week, erasing all gains from a rally earlier this year, following unexpectedly strong U.S. employment data that reshaped expectations for interest rates. The sharp decline, which also dragged down silver and other precious metals, highlights the metal's sensitivity to shifting monetary policy outlooks.

Spot gold fell to approximately $4,328 per ounce, marking a single-day decline of over 3% and a weekly loss exceeding 4%. This leaves the metal roughly 18% below its record high of $5,600 reached on January 29. Silver followed with a steeper correction, dropping to around $68 per ounce. The sell-off has turned gold prices negative for the year.

The catalyst was a U.S. jobs report released on Friday, June 5, which showed the economy added 172,000 jobs in May, significantly surpassing forecasts. This robust data strengthened confidence in the labor market's resilience and led investors to reduce expectations for near-term interest rate cuts by the Federal Reserve. Some market participants began considering the possibility of rates staying higher for longer.

Higher interest rates increase the opportunity cost of holding non-yielding assets...