Select Language

Gold price surges on weak US ISM report; trade tensions boost safe haven demand

Breaking news

Gold price surges on weak US ISM report; trade tensions boost safe haven demand

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.06.05 01:00
Gold price surges on weak US ISM report; trade tensions boost safe haven demand

update 2025.06.05 01:00

  • Gold rallies from $3,343 low after ISM and ADP reports confirm US economic slowdown.
  • Trump signs executive order raising metal tariffs to 50%, escalating US-China trade tensions.
  • Fed officials remain cautious on easing; markets await Jobless Claims and NFP for further policy cues.

Gold price rallied over 0.80% on Wednesday during the North American session. The release of weaker-than-expected economic data from the United States (US) pushed XAU/USD higher as business activity softened and the jobs market added fewer people to the workforce. The golden metal trades at $3,382 after hitting a daily low of $3,343.

Sino-US tensions had driven Bullion prices higher. Uncertainty about the outcome of the trade discussions between the White House and China and softer economic data in the US would underpin Gold prices.

In the meantime, US President Donald Trump signed an executive order increasing the levies on steel and aluminum from 25% to 50%, effective June 4, ahead of a scheduled phone call between Trump and China's President Xi Jinping later this week.

US economic data revealed that the economy is cooling, which could warrant further action by the Federal Reserve (Fed). The Institute for Supply Management (ISM) showed that business activity in the services sector contracted for the first time in almost a year. At the same time, private hiring in the country slowed sharply in May, according to the ADP National Employment Change data.

Following the data release, Trump complained about Fed Chair Jerome Powell being too late to lower borrowing costs. During the week, Fed officials expressed that they're patient regarding resuming the ongoing easing cycle that started in the second half of last year, adding that the impact of tariffs is unknown, which could fuel a persistent rise in prices.

Ahead this week, traders are eyeing US Initial Jobless Claims for the week ending May 31, followed by Nonfarm Payroll figures on Friday.

Gold daily market movers: XAU/USD soars as US Treasury yields plummet, weighing on the US Dollar

  • Gold price rallies as the US Dollar dives. The US Dollar Index (DXY), which tracks the value of the Greenback against a basket of six currencies, fell 0.44% down to 98.81.
  • US Treasury bond yields are falling. The US 10-year Treasury yield plunges 7.5 basis points to 4.383%. US real yields have followed suit and are also down by the same amount at 2.063%, a tailwind for Bullion prices.
  • The ADP National Employment Change figures for May rose by 37K, missing estimates of 110K and below the previous month's revised 60K print.
  • The ISM Services PMI tumbled from 51.6 in April to 49.9 in May, below forecast of 52.0.
  • Money markets suggest that traders are pricing in 54 basis points of easing toward the end of the year, according to Prime Market Terminal data.

Source: Prime Market Terminal

XAU/USD technical outlook: Gold remains bullish, but buyers are reluctant to crack $3,400

Technically, Gold price is upwardly biased, but during the session it has failed to clear the current week's peak of $3,392. Momentum, as depicted by the Relative Strength Index (RSI), shows buyers are in charge.

If XAU/USD climbs past $3,400, this clears the path to test key resistance levels. First, the May 7 peak comes at $3,438, which is followed by the $3,450 figure and by the all-time high (ATH) at $3,500.

On the flip side, if Gold falls below $3,300, sellers could send XAU/USD on a tailspin toward testing the 50-day Simple Moving Average (SMA) at $3,235, followed by the April 3 high turned support at $3,167.

Gold FAQs

Gold has played a key role in human's history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn't rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country's solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.


Date

Created

 : 2025.06.05

Update

Last updated

 : 2025.06.05

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

ECB's Šimkus: Interest rates are now at neutral

European Central Bank (ECB) Governing Council member Gediminas Šimkus said on Friday that "we have won battle against inflation in Europe."
New
update2025.06.06 15:36

EUR/GBP holds gains near 0.8450, upside appears as ECB signals an end to easing cycle

EUR/GBP extends its gains for the third consecutive day, trading around 0.8430 during the Asian hours on Friday. The currency cross remained stable after the European Central Bank (ECB) delivered a widely expected 25 basis point rate cut on Thursday, and reduced interest rates to 2.0% from 2.25%.
New
update2025.06.06 15:35

EUR/JPY Price Forecast: Climbs above mid-164.00s, bulls retain control near multi-week top

The EUR/JPY cross attracts some follow-through buying for the second straight day on Friday and trades near the mid-164.00s heading into the European session. Spot prices remain close to over a three-week high touched on Thursday and remain well supported by a broadly weaker Japanese Yen (JPY).
New
update2025.06.06 15:28

ECB's Kazaks: It may well be the case that we pause in July

European Central Bank (ECB) policymaker Martins Kazaks said on Friday, "it may well be the case that we pause in July."
New
update2025.06.06 15:08

German Industrial Production declines 1.4% MoM in April vs. -1% expected

Germany's industrial sector activity fell more than expected in April, according to the latest data published by Destatis on Friday.
New
update2025.06.06 15:04

Crude oil price today: WTI price bearish at European opening

West Texas Intermediate (WTI) Oil price falls on Friday, early in the European session. WTI trades at $62.43 per barrel, down from Thursday's close at $62.65.Brent Oil Exchange Rate (Brent crude) is also shedding ground, trading at $64.83 after its previous daily close at $65.05.
New
update2025.06.06 15:04

ECB's Villeroy: We have won battle against inflation in Europe

European Central Bank (ECB) policymaker Francois Villeroy de Galhau said on Friday that "we have won battle against inflation in Europe."
New
update2025.06.06 14:58

EUR/USD wobbles around 1.1440 ahead of US NFP data

The EUR/USD pair trades in a limited range around 1.1440 during Asian trading hours on Friday. The major currency pair consolidates as investors await the United States (US) Nonfarm Payrolls (NFP) data for May, which will be published at 12:30 GMT.
New
update2025.06.06 14:48

FX option expiries for Jun 6 NY cut

FX option expiries for Jun 6 NY cut at 10:00 Eastern Time vi a DTCC can be found below.
New
update2025.06.06 14:37

USD/CHF Price Forecast: Hovers above 0.8200 near nine-day EMA barrier

The USD/CHF pair extends its gains for the second successive session, trading around 0.8200 during the Asian hours on Friday. However, the bearish bias is prevailing as the pair moves downwards within the descending channel pattern.
New
update2025.06.06 14:29

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel