Gold prices (XAU/USD) recovered some lost ground, trading around $4,345 during the early Asian session on Monday, as escalating tensions in the Middle East and expectations of unchanged US Federal Reserve interest rates influenced market sentiment [1]. The Israeli military intercepted waves of missiles fired from Iran for the first time since early April, and Iranian officials warned that any attack from Israel against Lebanon or Iran would be met with a 'crushing and comprehensive response' [1][2]. US President Donald Trump stated he would call Israeli Prime Minister Benjamin Netanyahu to urge restraint, expressing concern that retaliation could jeopardize ongoing US-Iran negotiations [1][2].
The US Bureau of Labor Statistics reported that Nonfarm Payrolls (NFP) rose by 172,000 in May, surpassing market expectations of 85,000 and the previous revised figure of 179,000 (from 115,000). The Unemployment Rate remained unchanged at 4.3%, in line with consensus estimates [1][2]. This robust jobs report has led traders to price out near-term interest rate cuts, which has undermined gold's appeal as a non-yielding asset and boosted the US Dollar [1][2].
The Australian Dollar (AUD/USD) traded under selling pressure near 0.7035 during the early Asian session, impacted by both Middle East tensions and the stronger US jobs report, which supported the US Dollar as a safe-haven currency [2]. However, a hawkish stance from the Reserve Bank of Australia (RBA) may help limit the Aussie’s losses. RBA Governor Michele Bullock emphasized the central bank's focus on curbing inflation, noting three interest rate hikes earlier this year that pushed the cash rate to 4.35%. Bullock stated that inflation remains too high and the board will take necessary actions to achieve price stability and full employment [2].
Escalating geopolitical risks and strong US economic data have contributed to risk-off sentiment, favoring safe-haven assets like gold and the US Dollar, while weighing on risk-sensitive currencies such as the Australian Dollar [1][2].
CONCLUSION
Gold rebounded amid heightened Middle East tensions and strong US jobs data, but its upside remains limited by expectations of elevated US interest rates. The Australian Dollar weakened against the US Dollar, though a hawkish RBA stance may provide some support. Overall, geopolitical risks and robust US economic performance are driving risk-off sentiment and supporting safe-haven assets.