Gold Price Outlook: Gold Slammed Lower on Record US Jobs Creation

Gold Price (XAU/USD) Analysis, Prices and Charts

• Gold roiled by record US jobs report, higher US Treasury yields.
• Risk rally continues but recovery talk may be premature.

Gold Crumbles to a One-Month Low

A record surge in US employment on Friday sent gold into a tail spin and back to lows seen at the beginning of May. Just over 2.5 million jobs were added in May compared to market expectations of 8 million lost jobs, the largest month of job creation since the data series began. Last month the US economy lost just over 20 million jobs. Today’s positive data boost added to an already upbeat market tone and helped push gold back into the early $1,680s, its lowest level since May 2.

Gold has been a major beneficiary of a weak dollar and low US interest rates over the last three weeks and this looks likely to change in the short-term. The yield on the 10-year US benchmark is nearing 1%, up from 0.65% a week ago, dulling the appeal of the precious metal, while the US dollar basket may have found a temporary base around 96.50 after having fallen by four big figures since mid-May.

Risk assets remain in favor despite fears that a range of markets are becoming stretched, weighing on gold, as trader’s prefer to listen to the constant whirling sound of central bank printing presses and ignore heightened political risk. Relations between the US and China continue to sour and look set to get worse, China’s belligerent behavior in Hong Kong is drawing condemnation from across the globe, while the economic impact of the COVID-19 virus will be felt for years to come. These market negatives are not expected to disappear any time soon and will underpin gold in the weeks and months ahead.

The daily chart shows a clean break through the dominant uptrend and a retrace back down to $1,645/oz. appears increasingly likely, before the $1,600/oz. - $1,611/oz. comes into focus. Gold may struggle to break its recent high but will likely find risk-off bids to underpin itself at these lower levels.

Gold Daily Price Chart (October 2019 – June 5, 2020)

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