Gold prices experienced a slight decline during the Asian trading session on Friday, June 5th, as markets adopted a cautious stance in anticipation of the upcoming US Non-Farm Payrolls report. The spot price of gold fell by over 0.6%, dipping below the $4,440 per ounce level.
The US employment report for May is scheduled for release at 20:30 Beijing time on Friday. This data will provide the final snapshot of the American labor market before new Federal Reserve Chair Warsh convenes his first policy meeting later this month.
Anticipated Slowdown in Job Growth
Market participants currently expect a deceleration in employment growth following two consecutive months where job additions exceeded 100,000. The previous robust figures had reinforced the perception of a resilient labor market, despite ongoing geopolitical tensions fueling concerns about persistent inflation and elevated global interest rates. The April report showed an addition of 115,000 jobs, a slowdown from March's strong 178,000, yet still sufficient to keep alive the possibility of another Fed rate hike last month.
However, in recent weeks, prospects of a US-Iran framework deal potentially easing tensions in the Strait of Hormuz, coupled with stabilizing core PCE inflation readings, have firmly shifted market expectations towards rates remaining unchanged. The rationale for further hikes has largely dissipated.
Investors forecast May job growth to slow further to around 85,000, with the unemployment rate expected to hold steady at 4.3%. Average hourly earnings are projected to rise 0.3% month-over-month, up from the previous 0.2%, while annual wage growth is expected to ease slightly to 3.5% from 3.6%.
Bank of America's Optimistic Outlook
Bank of America presents a relatively optimistic view, forecasting 95,000 new jobs in May. Their reasoning includes consistently low initial jobless claims, strong ADP payroll data, and an additional boost from early hiring in the hotel and restaurant sectors ahead of the 2026 FIFA World Cup. The bank sees the risks to the employment data as skewed to the upside.
Is Slower Job Growth a Concern?
Does a slowdown in employment growth signal broader weakness in the labor market? JPMorgan Chase points out that May data often exhibits a specific seasonal pattern—statistics from the past 15 years show that job additions in May tend to fall below the three-month moving average. ADP's chief economist Nela Richardson noted that hiring growth in May was "more broad-based than at any point in the past few years," with the labor market continuing to show "sustained momentum" as the summer hiring season approaches.
Potential Fed Response to the Report
On the other hand, a recent decline in the quits rate suggests labor market conditions are not entirely robust, with worker confidence appearing cautious amid high geopolitical uncertainty. Even so, this environment may encourage Chair Warsh to remain patient, closely monitoring subsequent economic data rather than pivoting too quickly towards either easing or tightening—especially with Treasury yields persistently above 4.0%.
Furthermore, given the hawkish tone of the latest Fed meeting minutes and the need to secure broader committee support, it may be difficult for Warsh to immediately cut rates as requested by President Trump. Such a move could also raise concerns about Fed independence and potentially damage the Chair's credibility. Conversely, a stronger-than-expected, triple-digit jobs figure could reignite expectations for another rate hike or continued quantitative tightening—a point Warsh emphasized during his Senate confirmation hearing.
Gold's Vulnerability to Strong Data
If the May Non-Farm Payrolls data significantly exceeds expectations, markets will be forced to reprice the Federal Reserve's policy path. Strong employment numbers imply a persistently tight labor market and economic resilience beyond expectations, providing justification for the Fed to maintain its restrictive stance or even implement further rate hikes.
As a result, Treasury yields could rebound, with the 2-year yield potentially climbing back above 4.2%. Since gold is a non-yielding asset, rising US yields directly increase the opportunity cost of holding it, prompting investors to sell gold in favor of interest-bearing assets. Additionally, the US dollar could strengthen on hawkish expectations, further pressuring the dollar-denominated gold price.
Technical Analysis for Gold
Gold, having retreated from earlier highs, is currently trading near $4,440 per ounce. The price is facing resistance from the 20-day and 50-day moving averages and has pulled back to a key level near the 200-day moving average. There is potential for a double-bottom support pattern to form with the previous low around $4,366.
The MACD indicator remains below the zero line, with the green histogram narrowing, indicating a continued weakening of bearish momentum. However, a definitive bullish crossover signal has not yet appeared. The short-term trading range is defined between $4,366 and $4,543. A sustained break above $4,543 is needed to initiate a rebound, while a loss of support at $4,427 would increase downside risks. The prevailing market condition suggests continued low-level consolidation as a base is formed.
As of 12:05 Beijing time on June 5th, spot gold was trading at $4,443.10 per ounce.
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