Gold Rises for a Second Consecutive Session, Reclaims $4,700/Oz as USD and Yields Weaken

In the May 6 session, spot gold rose sharply by around 2.8% to $4,685.23/oz, while U.S. gold futures also settled 2.8% higher at $4,694.30/oz. This marked the highest level in more than a week, suggesting that buying momentum has returned decisively after the previous correction phase. One of the direct supporting factors was a roughly 0.4% decline in the Dollar Index, which made gold more attractive to investors.

In addition to a weaker USD, lower U.S. Treasury yields also played an important role in supporting gold prices. When yields decline, the opportunity cost of holding gold also falls. This is particularly important given that gold had previously come under pressure from expectations that the Fed could keep interest rates higher for longer if inflation remained persistent.

A notable point is that news related to a potential easing of U.S.–Iran tensions generated a positive reaction in gold, even though reduced geopolitical tensions would normally weaken safe-haven demand. The reason lies in the transmission channel through oil prices and inflation expectations. As Iran said it was considering a U.S. peace proposal, Brent crude fell toward $100 per barrel, easing concerns that an energy shock would continue to push inflation higher. As energy-driven inflation pressure eased, the market had more reason to expect that the Fed may not need to maintain an overly restrictive stance for an extended period, thereby creating a supportive backdrop for gold.

The latest rally also followed the recovery seen on May 5, when gold rebounded after touching its lowest level since late March. This suggests that lower price levels had triggered dip-buying demand, especially as macro conditions began to turn more favorable for the precious metal. In other words, the first session was more of a technical recovery, while the second was reinforced by clearer macro-driven catalysts.

In the short term, gold’s outlook appears more positive than it did at the start of the week. The recovery back above the $4,700/oz area indicates that buyers have returned, particularly as both the U.S. dollar and Treasury yields weakened. If gold can hold above this area, the market may continue to target higher levels around $4,750/oz and $4,800/oz.

However, the current rebound still needs confirmation from the official U.S. labor market data. The upcoming NFP report will be a key catalyst, as it could reshape expectations for Fed interest rates. If NFP comes in weaker than expected, gold could receive additional support from expectations of a more dovish Fed. Conversely, if the jobs data is too strong, yields may recover, the USD could rebound, and gold may face renewed short-term corrective pressure.

My view is that gold has the potential to maintain its short-term recovery trend if the $4,700/oz area holds. However, to confirm a more sustainable upward move, prices need to clearly break above the $4,730 - $4,750/oz zone with strong momentum. If gold fails to overcome this area, it could return to a range-bound structure, especially before the market receives clearer signals from the NFP report and upcoming Fed remarks.