Gold Prices Retreat as Treasury Yields Surge on Upbeat Jobs Report

Gold comes under pressure amid rising US bond yields and resilient labor market figures, dimming prospects for early Fed policy easing.

Bond Market Reacts to Fresh Data

Gold prices edged lower midweek as the bond market reacted sharply to stronger-than-expected US labor data. The yield on the benchmark 10-year US Treasury note jumped nine basis points to 4.312%, while real yields—measured via 10-year Treasury Inflation-Protected Securities (TIPS)—climbed 9.5 basis points to 2.062%. The spike in yields reflects renewed investor confidence in the strength of the US economy and the assumption that the Federal Reserve may hold rates higher for longer.

The move followed the release of April’s Nonfarm Payrolls (NFP) report, which showed a 177,000 increase in employment. While slightly below March’s downwardly revised 185,000, the number significantly outpaced market expectations of 130,000 new jobs. This came despite a weak ADP employment report earlier in the week that had pointed to slowing job creation. The surprise resilience in job growth lifted bond yields as traders dialed back expectations of near-term Fed rate cuts.

Steady Unemployment Dampens Gold’s Appeal

Compounding the pressure on gold, the US unemployment rate held steady at 4.2%, matching forecasts. This reinforces the narrative that the labor market remains robust enough to dissuade the Federal Reserve from pivoting to a looser monetary stance anytime soon. Gold, which yields no interest, tends to underperform in environments with high real yields and tight monetary policy.

Market participants are now closely watching upcoming inflation data and comments from Fed officials to gauge the future path of interest rates. Until signs of economic slowdown or easing inflation become more convincing, the case for a strong gold rebound remains limited.

Despite geopolitical risks and long-term demand from central banks, the near-term trajectory for gold may remain challenged by surging yields and a firm dollar. Unless economic data weakens significantly, investors could continue rotating out of safe-haven assets like gold in favor of yield-generating instruments.

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