Global financial markets underwent a dramatic shift following the release of the US non-farm payrolls report for May, which delivered a positive shock to the American economy while simultaneously dashing hopes of an interest rate cut. The US economy added 172,000 new jobs — nearly double analysts' forecasts — reflecting strong resilience in labour markets in the face of tight monetary policy, according to the Intercontinental Exchange.
These "hot" figures were immediately reflected in the performance of the US currency, as the Dollar Index (DXY) — which measures the greenback's performance against a basket of six major currencies — jumped 0.66%, closing steady at 100.05 points, its highest level in approximately two months. The surge completely dispelled investor hopes of the Federal Reserve taking any step to cut interest rates during the current year. In contrast, major global financial institutions such as Capital Economics and JPMorgan began revising their forecasts, pointing to the possibility of the Fed raising interest rates by an additional 25 basis points before the end of 2026, in order to contain mounting inflationary pressures driven by the continued rise in global energy prices.
The sudden strength of the dollar and the surge in US Treasury bond yields simultaneously imposed intense selling pressure on global gold markets. Spot gold prices in recent trading settled at $4,462.22 per ounce. This decline is directly attributable to the sharp rise in real bond yields — an investment environment in which non-yielding assets such as gold lose their appeal in favour of US securities, which have come to offer investors guaranteed and elevated returns.
Despite this downward wave and gold being forced to surrender some of its historic gains, analysts point to the existence of a "safety net" that prevents a sharp collapse in prices. This net is represented by the continuing escalation of geopolitical tensions in the Middle East, alongside concerns over structural global inflation. These factors continue to prompt central banks and some sovereign wealth funds to maintain minimum levels of gold demand, viewing it as the ultimate safe haven in times of crisis — a dynamic that has made the $4,460 level a strong support wall against downward waves.
The reverberations of the jobs report and tight monetary policy quickly spread to the trading floors of the New York Stock Exchange on Wall Street, where a state of confusion prevailed, leading to volatile trading that tilted toward a broad decline in major indices. The technology and artificial intelligence sector was the biggest loser, as the tech-heavy Nasdaq Composite fell 1,263 points over the trading week to close at 26,830.96 points, driven by widespread profit-taking that swept major semiconductor and electronic chip stocks such as Micron, Arm Holdings, and Broadcom, given these companies' elevated sensitivity to borrowing costs and high interest rates.
In contrast, defensive and traditional sectors showed notable resilience, helping to trim market losses. The healthcare and medical services sector rebounded, buoyed by a surge in the Eli Lilly share price, which benefited from positive reports regarding expanded insurance coverage for its new weight-loss drugs with billion-dollar revenue potential. The Apple share price also held firm near its record levels, supported by positive anticipation ahead of the launch of the Worldwide Developers Conference, at which the company is expected to unveil revolutionary upgrades to artificial intelligence integrated with the Siri voice assistant — providing relative protection for the S&P 500 index against a sharp slide.