Gold Prices Retreat After Record Highs Amid Trade Optimism, Strong U.S. Jobs Report

After surging to historic highs last month, gold prices took a breather last week as improving global trade sentiment and a stronger-than-expected U.S. jobs report reduced investor demand for the traditional safe-haven asset. Spot gold fell to a two-week low of $3,211.53 on Thursday before rebounding slightly on Friday. Despite the modest recovery, prices remain down 2.1% for the week, following a record-breaking peak of $3,500.05 per ounce on April 22. U.S. gold futures also saw a bounce, rising 1.3% to $3,262.10. 

Market Mood Shifts as Trade Talks Show Progress 

The pullback in gold was driven largely by renewed optimism around global trade negotiations. U.S. President Donald Trump hinted at potential deals with several nations, including India, Japan, South Korea, and notably China. He expressed confidence in the possibility of an agreement with Beijing, further easing fears of a prolonged trade standoff. 

Chinese state-affiliated media echoed this sentiment, reporting that the U.S. had initiated contact to restart discussions concerning the steep 145% tariffs imposed by the Trump administration. These developments encouraged investors to pivot back to riskier assets like equities, triggering profit-taking in gold. 

Jobs Data Cools Rate-Cut Hopes 

Friday’s release of the U.S. nonfarm payrolls report added to the pressure on gold. The economy added 1,77,000 jobs in April—beating market expectations of 1,30,000, though slightly below March’s revised total of 1,85,000. The data signalled continued resilience in the labour market, weakening the case for near-term interest rate cuts by the Federal Reserve. 

The stronger jobs report pushed 10-year Treasury yields higher, further eroding gold’s appeal, since the metal offers no yield. Elevated yields typically divert flows away from non-interest-bearing assets. 

Long-Term Outlook Remains Bullish 

Despite the week’s pullback, various market participants remain bullish on gold’s long-term trajectory. With the Fed unlikely to adjust rates until inflation eases significantly or the labour market weakens, gold continues to find support over the longer term, even if short-term volatility persists. 

Conclusion 

Although gold has pulled back from its record highs, the broader backdrop of economic uncertainty and geopolitical risk continues to offer long-term support. Market participants are now closely watching upcoming Federal Reserve moves and developments in global trade, particularly U.S.-China talks, for clues on gold’s next move. 

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