Gold Retreats After Strong NFP Report Reduces Fed Rate Cut Expectations

Gold Prices Pull Back as US NFP Surprises to the Upside

Gold (XAU/USD) prices edged lower on Friday, settling near $3,360 as traders digested a stronger-than-expected US Nonfarm Payrolls (NFP) report for May. The precious metal held steady above $3,350, but bullish momentum eased as rate cut expectations were recalibrated.

US Jobs Data Tempers Fed Rate Cut Outlook

The US economy added 139,000 jobs in May, beating the 130,000 consensus. Despite previous indicators suggesting labor market softness, the latest data renewed confidence in the economy’s underlying strength. The Unemployment Rate held at 4.2%, in line with forecasts.

From a monetary policy perspective, the market reaction was swift. The CME FedWatch Tool now shows only a 16.5% probability of a rate cut in July, down from 33.9% before the data release.

Gold Holds Above Key Support Despite Stronger USD

Despite the Dollar's rebound, Gold remains resilient, trading in a narrow consolidation zone just below its recent multi-year highs. The combination of easing rate cut bets and a stronger USD has capped further upside, but ongoing geopolitical and macroeconomic risks continue to support underlying demand for the metal.

Key Takeaways:

Gold price today: ~$3,360
US NFP (May): +139,000 vs. +130,000 expected
Unemployment Rate: 4.2% (unchanged)
Fed July rate cut probability: 16.5% (down from 33.9%)
XAU/USD support: $3,350
Immediate resistance: ~$3,400

What to Watch Next:

Investors will now turn their attention to next week's US inflation data, which could further shape the Federal Reserve’s rate path. Additionally, geopolitical developments in Eastern Europe and renewed trade negotiations between the US and China may continue to influence risk sentiment and safe-haven flows.