Short-Term Dollar Rebound Pressures Gold as Safe-Haven Demand Persists

Market Overview

Robust U.S. labor data helped ease concerns raised by the OECD over potential economic fallout from President Trump‘s tariff policies. U.S. equities continued their winning streak for a fourth session, led by a rally in chip stocks spearheaded by NVIDIA, which reclaimed its spot as the world’s most valuable company for the first time in over four months. Following the release of the latest JOLTS job openings data, U.S. Treasury yields surged to daily highs, while the dollar index rebounded sharply, pulling away from three-year lows. Gold prices retreated further, with intraday losses exceeding 1%, while crude oil gained over 2%, hitting a two-week high.

Hot Topics to Watch

● Strong Demand at Japans 10-Year Bond Auction

Amid rising global long-term yields, Japan's 10-year government bond auction surprised markets with overwhelming demand, offering a momentary relief to bond investors. The bid-to-cover ratio for the ¥2.6 trillion issuance jumped to 3.66 from 2.54 last month—well above the 12-month average. Markets are now focused on Thursdays 30-year auction, which may reveal whether investors are prepared for the policy normalization pains expected as the Bank of Japan moves away from ultra-loose monetary policy.

● “Asset Tax” Stirs Fresh Concerns, Dollar Still Under Pressure

The U.S. dollar has dropped 8.4% year-to-date—its worst start ever against a basket of major currencies. Analysts have flagged a potentially explosive provision in the federal tax and spending bill passed by the House and currently under Senate review. Buried in the legislation is Section 899, dubbed the “retaliation tax,” which would authorize the U.S. to impose levies on foreign investors from countries with “unfair” or “discriminatory” tax regimes. If enacted, it could escalate trade tensions into a full-blown capital conflict, threatening trillions of dollars in foreign-held U.S. assets and triggering large-scale capital outflows.

Key Events to Watch (GMT+8)

• 20:15 – US May ADP Employment Change (in thousands)

• 21:45 – US May S&P Global Services PMI Final

• 22:00 – US May ISM Non-Manufacturing PMI

• 22:30 – US Weekly EIA Crude Oil Inventories (ending May 30)

Overnight

• 02:00 – US Federal Reserve Beige Book Release