Gold Prices Plummet Amid Strong US Jobs Data, Rate Hike Bets Rise

Precious Metals Fall Amid Stronger-Than-Expected US Jobs Report

Precious metals came under renewed selling pressure on Friday, 5 June, after a stronger-than-expected US jobs report reinforced expectations that the US Federal Reserve could keep interest rates higher for longer. The report, which showed that US job growth exceeded all forecasts in May, with the unemployment rate remaining steady at 4.3%, offered the clearest sign yet that the labour market may be emerging from a prolonged period of sluggish hiring.

Comex gold slumped $136 per troy ounce to the day's low of $4,369, marking its lowest level since late March. The latest sell-off widened gold's weekly losses to nearly 5% so far. Silver, which is typically more volatile than gold, dropped even further, falling $5.34 to touch the day's low of $68.63. The white metal was last seen around these levels on 30 March and is now down nearly 9% for the week, heading for its fourth straight weekly decline.

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Higher bond yields are generally negative for precious metals, as bullion does not offer any interest income. Treasury yields moved higher following the report as expectations grew that the Federal Reserve could raise interest rates by the end of the year, according to data from the CME FedWatch Tool.

The stronger jobs report arrived at a time when inflation remains well above the US Federal Reserve's target, keeping expectations alive for a possible rate hike in 2026 rather than a rate cut. Since the start of the Middle East conflict in late February, expectations of higher interest rates have strengthened, although they briefly eased following indications of a potential peace deal in the region. However, the lack of meaningful progress toward a resolution has continued to keep both gold and silver under pressure.

US President Donald Trump said peace negotiations were nearing their final stage and appeared reluctant to escalate tensions with Iran despite recent military confrontations. Gold and silver have fallen more than 17% and 18.3%, respectively, since the US-backed conflict with Iran began in late February.

The strong US jobs data also triggered a rebound in the US dollar Index, which climbed to 99.5 and remained on track for a weekly gain. The stronger dollar also added pressure, as dollar-priced metals became more expensive for holders of other currencies.

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Tracking weakness in the international market, the near-month gold futures contract on MCX crashed ₹4,472 per 10 grams to hit the day's low of ₹1,54,803, erasing part of its recent gains. Today's sharp decline also pushed the metal into negative territory for the week, down 0.30% so far. If gold closes the week lower, it would mark its second consecutive weekly decline after falling 2% in the previous week.

Silver futures also witnessed heavy selling pressure, plunging ₹16,000 to slip below the ₹2.50 lakh mark at ₹2,48,255 per kilogram. For the week, the white metal has declined by more than ₹18,000. From its recent peak of ₹3,04,891, silver has tumbled ₹56,636, reflecting the sharp correction in precious metals amid rising bond yields and expectations of prolonged higher interest rates.