Gold prices trimmed some of Monday’s gains on Tuesday, falling over 0.80% amid robust US labor market data that reinforced a tight job market. The XAU/USD pair currently trades near $3,348, down from a daily high of $3,392.
Investor sentiment turned optimistic following the release of the US Job Openings and Labor Turnover Survey (JOLTS), which revealed a sharper-than-expected rise in job vacancies for April. This upbeat data sets the tone for a busy week ahead, with key employment reports due later this week. On Wednesday, the Automatic Data Processing (ADP) National Employment Change report for May is expected to show improvement, followed by Friday’s closely watched Nonfarm Payroll numbers.
Gold prices also pulled back amid rumors of a possible phone call between US President Donald Trump and Chinese President Xi Jinping. Last week, Trump accused China of violating a trade agreement reached in Switzerland and announced plans to double tariffs on steel and aluminum—from 25% to 50%—starting June 4.
Meanwhile, the European Commission has called on the US to reduce these tariffs, but the Trump administration has urged trading partners to submit revised offers by Wednesday to accelerate trade negotiations.
Atlanta Federal Reserve President Raphael Bostic recommended a patient approach to monetary policy, signaling expectations for only one rate cut this year.
US Dollar Strength Pushes Gold Prices Lower
The US Dollar staged a recovery on Tuesday, exerting downward pressure on gold. The US Dollar Index (DXY), which measures the Greenback against six major currencies, rose 0.52% to 99.22.
Rising US Treasury yields added to gold’s challenges. The 10-year US Treasury yield climbed two basis points to 4.462%, with real yields following suit, increasing by two basis points to 2.132%.
April’s JOLTS report showed 7.39 million job openings, up from a revised 7.2 million in March, defying economists’ expectations for a decline to 7.10 million vacancies.
Heightened US-China trade tensions continue to influence gold’s trajectory. Tariff increases on base metals could stoke inflationary pressures, supporting gold’s safe-haven appeal. Conversely, a breakthrough in negotiations may ease tensions and weigh on bullion prices.
Money markets currently price in about 48.5 basis points of rate easing by year-end, reflecting cautious optimism on the economic outlook.
Technical Outlook: Gold Eyes $3,400 Despite Short-Term Dip
Despite the recent pullback, gold’s uptrend remains intact, offering buyers a potential entry point near $3,300 with a target of $3,400.
Key resistance lies at the May 7 peak of $3,438. Surpassing this level could open the path to $3,450 and eventually the all-time high of $3,500.
On the downside, a break below $3,300 may trigger a deeper decline toward the 50-day Simple Moving Average at $3,235 and further support at the April 3 high of $3,167.
