Gold (XAU/USD) traded around $4,463 on Friday, marking a 0.26% decline for the day as investors reduced exposure ahead of the US May employment report [1]. The precious metal has remained volatile due to ongoing tensions in the Middle East and uncertainty regarding US monetary policy [1]. Market sentiment has been negatively affected by the lack of progress in negotiations between the United States and Iran. Iranian Foreign Minister Abbas Araghchi stated that no significant progress had been made and warned that further military escalation could reignite conflict, contrasting with US President Donald Trump's assertion that negotiations are in their final stages [1].
Geopolitical concerns have heightened worries about global inflation, especially due to risks to energy supplies. TD Securities strategist Bart Melek noted that higher inflation expectations, linked to supply shocks, have contributed to rising US Treasury yields and continued strength in the US Dollar (USD), thereby reducing the appeal of Gold as a non-yielding asset [1].
Investors are now focused on the upcoming US employment report. Consensus forecasts anticipate 85K Nonfarm Payrolls (NFP) added in May, down from 115K in April, with the Unemployment Rate expected to remain unchanged at 4.3%. A stronger-than-expected report would likely bolster the US Dollar and increase downward pressure on Gold in the near term [1].
Despite the current pullback, Gold continues to find support from safe-haven demand amid a fragile geopolitical environment. However, traders are expected to remain cautious ahead of the employment data release, which could serve as the main catalyst for Gold price action in the short term [1].
CONCLUSION
Gold prices edged lower as investors await the US employment report and monitor unresolved Middle East tensions. Rising US Treasury yields and a strong US Dollar have diminished Gold's appeal, though safe-haven demand persists. The employment data release is expected to be a key driver for Gold's near-term movement.