Spot gold was down 0.9% to $4,447.09/oz, while gold futures dropped 1% to $4,475.01/oz

Gold prices edged lower on Wednesday amid a stronger dollar and higher interest rates.

At 13:42 GMT, spot gold was down 0.9% to $4,447.09/oz, while gold futures dropped 1% to $4,475.01/oz.

Against this backdrop, oil prices rose on Wednesday, boosting inflationary fears.

Precious metal market participants were also focused on Wednesday’s U.S. economic calendar.

The highlight was ADP’s monthly report on the state of the private sector. Job growth in the sector was 122k in May, the biggest increase since January 2025, with gains in eight out of 10 sub-sectors.

The data showed that the U.S. labor market continued to strengthen after a period of cooling towards the end of last year. The May nonfarm payrolls report scheduled for Friday will give another major indication on the state of job growth.

With labor trends looking positive, it has given the U.S. central bank some space to focus squarely on the inflation part of its mandate amid surging oil prices due to the Iran war. Speaking of the central bank, its latest Beige Book said economic activity increased at a slight to moderate pace in 10 of the 12 Fed regional districts.

Separately, data from the Institute for Supply Management (ISM) on the U.S. services sector came in strong on the surface, but also showed inflationary pressures. ISM’s headline services PMI index ticked up to 54.5 in May, better than expected and accelerating from April. The report also showed that for the third month in a row, no commodities saw a decrease in prices. The overall prices index posted its highest reading since August 2022.

Across the 10 responses included from this month’s ISM survey of service-industry purchasing managers, the dominant theme is rising costs, driven by fuel and energy prices, tariffs, and AI-related demand, the Wall Street Journal’s Fed whisperer, Nick Timiraos, said.

No respondent reports prices easing or falling. A few comments focus more on supply tightness than on prices directly, but none point in a disinflationary direction, he added.