U.S. Non-Farm & Trade Talk Fuel Optimism

Investor confidence regained ground late last week as progress in U.S.-China trade talks combined with a stable U.S. labor market helped fuel optimism in the markets.

Non-Farm Payroll Overview

The latest U.S. Non-Farm Payroll (NFP) report showed that the economy added 139,000 jobs in May, slightly above expectations of 130,000. April’s figure was revised down to 147,000, indicating a slower—but still resilient—labor market.

US Non-Farm Payroll | Source: U.S. BLS, TradingEconomics

Other key data points from the report:

• The unemployment rate held steady at 4.2%, but the labor force participation rate fell, with 625,000 people exiting the workforce.
• Average hourly earnings rose 0.4% month-over-month, pushing annual wage growth to 3.9%.

Despite the stronger-than-expected job gains and wage growth remain robust, the pace of hiring has clearly cooled from earlier in the year. The decline in workforce participation signals growing uncertainty among workers, possibly reflecting concerns over tariffs and ongoing trade tensions.

While the labor market remains stable, investors continue to watch for signs that broader economic momentum may be softening.

U.S.-China Trade Talks in Focus

On the trade front, sentiment improved after both Washington and Beijing confirmed that President Trump and President Xi held a phone conversation last week—an exchange reportedly initiated by Trump, according to China’s Foreign Ministry.

Looking ahead, a ministerial-level U.S.-China trade delegation is set to meet on Monday, June 9 in London. The upcoming meeting will focus on advancing negotiations on tariffs and other key trade issues.

As progress continues, the market remains highly sensitive to any developments. While the stable labor data offers a short-term cushion, underlying concerns around trade policy uncertainty and global supply chain disruptions remain a key risk to watch.

Market Implication: Gold Faces Pressure, Dollar Outlook Remains Uncertain

Last week, market sentiment turned increasingly optimistic as progress in U.S.-China trade talks lifted confidence. This renewed optimism fueled a rally across global equity markets. However, gold—typically a safe-haven asset—faced selling pressure as risk appetite returned.

Beyond trade developments, attention also shifts to the upcoming release of the U.S. Consumer Price Index (CPI), a key indicator for inflation. This data will be critical for shaping expectations around the Federal Reserve’s policy path.

While the Fed has signaled a dovish stance but they remain on cautious on complicated economic outlook, any upside surprise in inflation could complicate the case for further easing. In that scenario, the U.S. Dollar could remain under pressure, as fiscal concerns linger and uncertainty around monetary policy persists.

Technical Outlook: US Dollar & Gold

US Dollar: Hovering on 99-mark

USDX, Day-Chart Analysis | Source: Ultima Market MT5

The U.S. Dollar showed limited reaction to the stronger-than-expected labor data, failing to sustain gains as broader economic and fiscal concerns linger. The Dollar Index continues to hover around the key psychological level of 99–100, reflecting cautious sentiment among investors and traders.

From a technical standpoint, the price action suggests that persistent concerns over U.S. fiscal policy and trade uncertainty are capping the Dollar’s upside momentum. Until a clearer catalyst emerges—such as this week’s inflation data or further trade developments—the Dollar is likely to remain range-bound near its current levels.

Gold: Safe-Haven Demand Weakens on Trade Optimism

Gold came under pressure last week as renewed optimism surrounding U.S.-China trade talks triggered a round of profit-taking in safe-haven assets. The metal erased much of its earlier gains and remains confined within a broader consolidation range.

XAUUSD, H4 Chart Analysis | Source: Ultima Market MT5

Technically, the $3,335 level now serves as a key resistance. As long as prices remain capped below this level, gold may be vulnerable to deeper pullbacks in the near term. A break above this resistance would be needed to revive bullish momentum.

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