Key Moments
- Gold (XAU/USD) traded near $4,345 in early Asian dealings on Monday after rebounding from recent losses.
- Stronger-than-expected US Nonfarm Payrolls of 172K in May reduced expectations for imminent Federal Reserve rate cuts.
- Heightened Middle East tensions, including fresh Iranian threats of retaliation, continued to shape safe-haven sentiment.
Gold Edges Higher in Early Asian Trade
Gold prices recovered at the start of the week, with XAU/USD hovering around $4,345 during Monday’s early Asian session. The move restored part of the metal’s recent declines, although the scope for additional gains appeared constrained by persistent Middle East tensions and market expectations that the Federal Reserve will leave interest rates unchanged.
Middle East Developments Shape Risk Sentiment
According to Reuters, the Israeli military reported on Sunday that it had intercepted multiple missile salvos launched from Iran, marking the first such incident since early April. Iranian officials warned that any Israeli action targeting Lebanon or Iran would trigger a “crushing and comprehensive response.”
US President Donald Trump said that he would contact Israeli Prime Minister Benjamin Netanyahu to urge restraint and ask him not to retaliate. Trump also commented that Netanyahu will have “no choice” but to agree to a deal with Iran and noted that Iran’s strikes have not altered his intention to pursue US-Iran negotiations.
The ongoing confrontation in the region has reinforced concerns about inflation and the potential for interest rates to remain elevated, a backdrop that tends to pressure gold as a non-yielding asset even as it supports its role as a safe haven.
Robust US Labor Data Weighs on Rate-Cut Hopes
Fresh US labor market data added another headwind for bullion. Figures from the US Bureau of Labor Statistics released on Friday showed that Nonfarm Payrolls increased by 172K in May. This compared with a previously reported 115K that was revised to a 179K gain, and it surpassed market expectations of 85K by a substantial margin.
At the same time, the Unemployment Rate held steady at 4.3% in May, matching consensus forecasts. The firmer jobs report prompted traders to fully remove expectations for near-term interest rate cuts, undermining support for the yellow metal.
| US Labor Indicator (May) | Actual | Prior (Revised) | Market Expectation |
|---|---|---|---|
| Nonfarm Payrolls | 172K | 179K (revised from 115K) | 85K |
| Unemployment Rate | 4.3% | 4.3% | 4.3% |
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