Gold Pulls Back as US Dollar Strengthens

The gold price ( XAU/USD ) fell by 0.83% on Tuesday, retreating from a nearly four-week high as the US dollar (USD) strengthened.

"It’s hard to know what’s really driving things today", said Chuck Carlson, CEO of Horizon Investment Services in Hammond, Indiana. "There seems to be a little bit more comfort that the economy is not going into recession, and there might be a bit of front-running here in the sense we have a jobs report that’s going to be coming out, and investors want to get on the right side of that before it’s released".

Meanwhile, the Organization for Economic Cooperation and Development (OECD) sharply downgraded its global growth outlook, warning that the world economy is likely to slow more deeply than previously expected. The OECD cited escalating protectionist policies—particularly the ongoing US–China trade war—as key risks. It noted that rising tariffs are fuelling inflationary pressures, disrupting global supply chains, and undermining business confidence. The organisation emphasised that if trade tensions continue to escalate, the global economy could slow down further heading into 2026.

XAU/USD rose during the Asian session but lost most of its gains during the early European trading hours. Markets now turn their attention to the ADP US Employment Report, due at 12:15 p.m. UTC today. As a widely watched proxy for nonfarm payroll data, the release may trigger volatility across all USD-related pairs.

Softer-than-Expected Inflation Data Pressures Euro

The euro ( EUR/USD ) fell by 0.64% against the US dollar (USD) on Tuesday after eurozone inflation came in slightly below expectations.

A report showed that eurozone consumer prices rose by 1.9% year-over-year in May, falling just under the 2% market forecast. Weaker-than-expected data heightened expectations that the European Central Bank (ECB) will deliver a 25-basis-point rate cut later this week. With inflation now below the ECB’s target and signs of a cooling economy, markets view this move as a final cut before the central bank pauses its easing cycle to reassess incoming economic data.

At the global level, the Organization for Economic Cooperation and Development (OECD) revised its global economic outlook, projecting GDP growth to slow from 3.3% in 2024 towards 2.9% in 2025 and 2026. The downgrade reflects growing concerns over escalating trade tensions, which the OECD warns could further undermine business investment, distort supply chains, and fuel inflationary pressures. All these challenges may complicate the path forward for both monetary and fiscal policymakers worldwide.

EUR/USD remained unchanged during Asian and early European trading sessions. Today, the main focus is on the US macroeconomic reports: ADP Employment at 12:15 p.m. UTC and ISM Services Purchasing Managers’ Index (PMI) at 2:00 p.m. UTC. Stronger-than-expected figures may provoke a downward correction in EUR/USD. Conversely, weaker-than-expected results may lift the pair towards 1.14500.

Australian Dollar Strengthens Despite Weak GDP

The Australian dollar ( AUD/USD ) gained 0.51% on Tuesday as a weaker US dollar (USD) helped offset disappointing domestic Gross Domestic Product (GDP) figures.

Australia’s economy expanded by just 0.2% quarter-on-quarter in Q1 2025, marking the slowest growth in three quarters and falling short of the 0.4% forecast. On an annual basis, GDP rose by 1.3%, below the expected 1.5%. Weaker-than-expected figures strengthened expectations of further monetary easing by the Reserve Bank of Australia. Futures pricing now indicates an 80% probability of an additional rate cut at the July meeting.

Adding to market uncertainty, US President Donald Trump’s latest tariffs on steel and aluminium officially take effect on 4 June, exacerbating tensions with key trading partners. Relations between Washington and Beijing remain fragile, with both sides accusing each other of breaching the terms of their recent trade agreement. Investors are now closely watching for a potential meeting between Trump and Chinese President Xi Jinping later this week, which could lead to either a diplomatic resolution or a further escalation.

AUD/USD fell during Asian and early European trading hours. Today, the main focus is on two US macroeconomic reports: ADP Employment at 12:15 p.m. UTC and ISM Services Purchasing Managers’ Index (PMI) at 2:00 p.m. UTC. A higher-than-expected number will pressure AUD/USD lower, while softer data may support the pair.