Gold erases yearly gains as robust US jobs data fuels Fed rate hike bets

Gold just gave back everything it earned this year in a single session. Spot prices dropped as much as 3.6% on June 5, sliding to $4,319 per ounce after the US Bureau of Labor Statistics reported the economy added 172,000 jobs in May, roughly double what economists had penciled in.

The consensus forecast sat around 85,000 new jobs.

The numbers behind the selloff

May’s jobs figure wasn’t the only upside surprise. April’s numbers were revised upward to 179,000. The unemployment rate held steady at 4.3%.

The CME FedWatch tool reflected the shift in sentiment almost immediately. The probability of a Federal Reserve rate hike by December 2026 jumped to between 68% and 72%, up from roughly 50% before the jobs report dropped.

Silver got hit even harder, falling as much as 7.8% in the same session.

A 16% decline since late February

Gold has now lost more than 16% of its value since late February 2026, when geopolitical tensions in the Middle East escalated significantly, particularly around the US-backed conflict with Iran.

The inflationary pressures stemming from the conflict have given the Federal Reserve additional justification to keep rates elevated or push them higher. Gold’s lack of yield becomes a bigger liability in a high-rate environment, even if the reasons rates are high would traditionally make gold more appealing.

The US dollar strengthened alongside rising Treasury yields following the jobs report, creating a double headwind for gold. A stronger dollar makes gold more expensive for international buyers, while higher yields increase the opportunity cost of holding a non-yielding asset.

What this means for investors

The spillover effects extend beyond precious metals. Bitcoin and other risk assets also took hits following the jobs data.