Weekly Market Wrap: Gold Pulls Back Amid Dollar and Bond Rotation

Happy Friday, traders! Welcome to our weekly market wrap, where we review the last five trading days, focusing on the news, economic data, and headlines that significantly impacted gold prices and related assets.

Key Highlights

• Gold Prices Decline: This week, gold prices fell, ending near $3225 per ounce despite negative economic indicators.
• Economic Reports: Q1 GDP unexpectedly contracted, but instead of a rally, gold prices continued to drop.
• Mixed Jobs Data: April jobs data was inconclusive, failing to boost safe-haven assets like gold.
• Investor Rotation: Traders shifted into the U.S. Dollar and Treasury markets, adding pressure on gold prices.
• Historical Context: While gold remains high historically, it appears over-extended, leading to price corrections.

Weekly Overview

Economic Context

Recent discussions around the Trump Tariff plan have continued but with less clarity and impact on gold pricing. Two major U.S. economic reports were released this week, yet gold’s reaction highlighted its over-bought condition after reaching record highs.

GDP Contraction

On Wednesday, the U.S. reported its first estimate of Q1 2025 GDP, revealing an unexpected contraction. Analysts had anticipated minimal growth, so this news indicated that the economy might be halfway to a recession. Typically, such news would drive gold prices up as a safe-haven asset, but instead, gold slid from $3300 to $3235 per ounce on Wednesday. This downward trend continued into the next Asian trading session, with prices briefly testing the $3200 support level before a slight rebound on Thursday.

Jobs Data Confusion

Friday morning brought April’s non-farm payroll data, which presented a mixed picture. The U.S. added 177,000 jobs, surpassing expectations of 130,000. However, the previous month’s strong numbers were revised significantly lower. This duality left investors uncertain: some viewed it as a sign of economic resilience while others saw it as a concerning reversal of previously robust labor market data. Despite this, gold prices fell again and looked set to close the week around $3225 per ounce.

Dollar and Bonds Impact

The overall decline in gold prices can be attributed to a shift in investor sentiment. As traders moved funds into the U.S. Dollar and Treasury securities for safety, the Dollar strengthened, and bond yields rose. This created a negative feedback loop for gold, exacerbating its price decline. Investors’ preference for the Dollar and USTs over gold signals a broader market shift in response to economic uncertainty.

Looking Ahead

The market dynamics are likely to evolve next week, especially with the FOMC meeting concluding midweek. Traders will be watching closely for any shifts in monetary policy that could affect gold prices.

As we head into the weekend, I hope you take some time to relax and recharge. Join me next week for another comprehensive market recap.

Feel free to reach out if you have any questions or need further insights!