Gold Erases Last of 2026 Price Gains as Fed Rate Bets Soar on Strong Jobs Shock

GOLD and SILVER PRICES sank on Friday after new US jobs data blew past analyst forecasts, boosting expectations that the Federal Reserve − now under Trump White House appointee Kevin Warsh − will raise Dollar interest rates rather than cutting them as the Iran war's oil-price shock continues.

Despite oil prices slipping today, Brent crude still showed a weekly rise of 3.9% on the ICE derivatives exchange's August futures.

London gold bullion, in contrast, lost 3.9% from last Friday's finish, dropping over $100 per troy ounce on today's stronger-than-expected US jobs figures and setting its lowest London 3pm auction price since the first trading day of the year.

With traders in CME interest-rate futures now pricing a November rate rise from the Fed as a 50-50 shot, the market's consensus view for year-end interest rates rose to 3.87% − the highest such forecast since mid-March's spike towards 4.00% saw gold sink fastest since its 2013 crash.

After soaring almost 30% in January to hit all-time records near $5600 gold this New Year, "the market soon corrected after Kevin Warsh's nomination as Fed Chairman eased concerns over Fed independence and reinforced expectations of a more hawkish rate outlook," says specialist consultancy Metals Focus, presenting its latest supply and demand data and outlook this week.

"The Iran war added downward pressure by raising inflation expectations, lifting sovereign yields and strengthening the case for higher interest rates."

Silver on Friday had already banked a 4.0% drop for the week at today's midday London auction.

The more industrially-useful precious metal then lost a further $1.90 per troy ounce in spot market trading after the Bureau of Labor Statistics said non-farm US payrolls grew by 172,000 last month.

With April's figure also revised higher, that NFP jobs number was twice the size of consensus forecasts for May.

US stock markets opened the day sharply lower, pulling the MSCI World Index down 1.0% for its worst weekly drop since late-March, while silver sank to its lowest price since end-March beneath $69.50 per ounce.

Government bond prices also dropped, driving up borrowing costs alongside Fed rate-hike expectations, with US and also German government bond yields hitting the highest in 2 weeks above 4.50% and 3.00% respectively on 10-year debt.

Back in the Middle East, Iran's navy today said it has fired warning shots at US warships in the Gulf of Oman.

Potential peace talks with Israel will see Iran-backed Hamas refuse to disarm, a senior official told Al-Jazeera.

Iran-backed Hezbollah today continued to ignore the truce agreed between Israel and Lebanon, saying that it made 8 attacks today on Israeli military positions.

Ukraine's President Zelenskyy meantime wrote to Russia's President Putin, mocking but also inviting his opposite number to Kyiv for peace talks more than 4 years into Moscow's attempted invasion.

"The economic and political costs of a prolonged conflict will likely drive a relatively swift resolution" between the US and Iran, says Metals Focus launching its new Gold Focus 2026.

"While inflationary pressures are expected to persist, the consultancy does not ascribe to the growing consensus that US rate hikes are likely over the next 12 months."

So "crucially" for gold, "the drivers from 2025 remain intact: ongoing US policy uncertainty, persistent concerns about the dollar's long-term outlook, elevated geopolitical risks, and stretched equity valuations."

Now under Kevin Warsh, the US Fed is set to end making "forward guidance" on interest rates, the Financial Times reports, erasing the 'dot plot' forecasts given by policymakers since 2012.