Gold prices experienced a volatile week as geopolitical uncertainty offered only limited safe-haven support, while stronger U.S. labor data, rising Treasury yields, and renewed concerns over higher interest rates pushed the precious metal sharply lower.

Gold Starts the Week Higher but Quickly Loses Momentum

Gold opened the week at around USD 4,539.42 per ounce, initially supported by rising geopolitical uncertainty in the Middle East. Market participants reacted to fresh concerns surrounding Iran and the Strait of Hormuz, which briefly boosted demand for safe-haven assets.

However, the rally did not last long. Reports suggesting that Iran was stepping back from negotiations caused oil prices, U.S. Treasury yields, and the U.S. dollar to move higher. These factors quickly weighed on gold, which reached its weekly high of USD 4,545.55 per ounce on Monday before sellers took control.

Middle East Tensions Provide Limited Support

Throughout the week, geopolitical developments remained an important driver for gold. Expectations of easing tensions between Israel and Hezbollah, along with hopes for progress toward reopening the Strait of Hormuz, helped gold stabilize at times.

However, the safe-haven demand was not strong enough to offset the pressure from stronger U.S. economic data. While uncertainty in the Middle East usually supports gold, this time the impact was limited because the conflict also pushed oil prices higher and strengthened concerns about inflation and interest rates.

U.S. Labor Data Weighs on Gold

The main pressure on gold came from the U.S. labor market. April JOLTS data showed job openings rising to 7.6 million, suggesting that demand for labor remained resilient. At the same time, ADP data also pointed to steady labor-market conditions.

These figures reduced expectations that the Federal Reserve would ease monetary policy soon. For gold, this is a negative signal because higher interest rates increase the opportunity cost of holding non-yielding assets such as precious metals.

In simple terms, when U.S. bonds offer more attractive yields, gold becomes less appealing to some investors. A tragic little reminder that even safe-haven assets have to compete for attention.

Strong May Jobs Report Triggers Friday Selloff

The biggest move came on Friday after the U.S. May jobs report came in stronger than expected. U.S. payrolls increased by 172,000, reigniting concerns that the Federal Reserve may keep interest rates higher for longer.

Following the release, gold sold off sharply and broke below several key technical levels. The metal fell to its weekly low of USD 4,311.93 per ounce on Friday afternoon before recovering slightly near the close.

This sharp decline showed how sensitive gold remains to U.S. economic data and expectations surrounding Fed policy.

Technical Outlook Turns More Bearish

Gold’s technical picture also weakened during the week. According to Marc Chandler, Managing Director at Bannockburn Global Forex, gold looked heavy after falling below its 200-day moving average near USD 4,428.

He noted that gold had not settled below this level since November 2023, making the break technically significant. The next important level to watch is around USD 4,367, which was May’s low.

If gold fails to regain key technical levels, selling pressure may continue in the short term.

Market Sentiment Becomes More Pessimistic

The latest Kitco News Weekly Gold Survey showed that Wall Street turned overwhelmingly bearish on gold’s near-term outlook. Main Street investors also became more pessimistic after gold’s weak weekly performance.

Adrian Day, President of Adrian Day Asset Management, said gold may remain within a trading range until hostilities involving Iran come to an end. He explained that the conflict is supporting the U.S. dollar and pushing oil prices higher, which can raise concerns about inflation and interest rates. Both factors are negative for gold.

Conclusion

Gold ended the week under strong pressure as the market shifted its focus from geopolitical risks to U.S. labor data, Treasury yields, and Federal Reserve policy expectations.

Although Middle East uncertainty continues to offer some safe-haven support, it has not been strong enough to counter the impact of a stronger U.S. dollar, rising yields, and renewed fears of higher interest rates.

In the near term, traders will continue to watch upcoming U.S. inflation data, labor-market reports, Treasury yield movements, and comments from Fed officials. These factors will likely determine whether gold can recover or face further downside pressure.

For now, gold remains in a fragile position, with sentiment turning more cautious and technical signals pointing to increased downside risk.

Source: Reuters