Gold Prices Drop as Strong US Jobs Report Boosts Dollar & Yields

June’s US employment report surpassed estimates and May’s figures, with the Unemployment Rate nearing 4%, showing a solid labor market. This contradicts Wednesday’s ADP report, which indicated a 33K decrease in private company hiring. Consequently, the Greenback rose, supported by increased US Treasury yields. Money market futures now price in two rate cuts by late 2025, differing from the 65 bps easing anticipated at July’s start.

The Federal Reserve (Fed) reiterated its commitment to maintaining current interest rates until there’s evidence of a weakening labor market or a return to deflation, a position supported by the latest data.

Furthermore, US Treasury Secretary Scott Bessent announced that additional trade agreements are anticipated, subsequent to the announcement of the Vietnam accord. He further stated that the Federal Reserve is responsible for determining interest rates and indicated that the administration would commence the process of identifying Powell’s successor in the autumn.

Concurrently, the US House of Representatives advanced Trump’s “One Big Beautiful Bill” for a conclusive vote. The proposed fiscal budget is projected to augment the US national debt by $3.3 trillion over the forthcoming decade.

Gold Retreats On US Yields And US Dollar Advance

Gold prices are falling as US Treasury yields and the US Dollar strengthen. The US economy added more jobs than expected in June (147,000), and the unemployment rate decreased to 4.1%, supporting a cautious approach from the Federal Reserve. Initial Jobless Claims also fell, and the ISM Services PMI rose, indicating a resilient labor market and an expanding services sector. The US House of Representatives is expected to pass Donald Trump’s fiscal package bill. Atlanta Fed President Raphael Bostic also favors a wait-and-see monetary policy due to economic uncertainty and potential tariff-related inflation. Central banks, led by Kazakhstan, Turkey, and Poland, added 20 tonnes of gold in May. Money markets are pricing in 50 basis points of easing by year-end.

XAU/USD Technical Outlook

Gold faces consolidation below $3,400 due to buyer hesitancy, despite its uptrend. To challenge the $3,500 record, XAU/USD needs to surpass the June 16 high of $3,452. Conversely, a fall below $3,300 targets the June 30 low of $3,246.